• Strategy
  • Options
  • Price Action
  • Indicators
  • Beginner
  • Psychology
  • Brokerage
  • Tools
  • Free Course
No Result
View All Result
MauriceKennyTrading
  • Strategy
  • Options
  • Price Action
  • Indicators
  • Beginner
  • Psychology
  • Brokerage
  • Tools
  • Free Course
No Result
View All Result
MauriceKennyTrading
No Result
View All Result

Risk: Identify, Assess and Control

Risk Fundamentals

Maurice Kenny by Maurice Kenny
September 11, 2022
0
Risk: Identify, Assess and Control
Share On FacebookShare On TwitterShare On LinkedinShare On RedditShare On Email

Risk is known as the possibility of something bad happening. Risk involves uncertainty about the effects of activity concerning something that humans value. Such as wealth, well-being, family, property, or the environment. It is human nature to focus on the negative and undesirable consequences. When it comes to day trading, the risk is the chance that a stock will lose value. An investor’s personality, lifestyle, and age are some of the top factors to consider for individual investment management and risk purposes.

Each investor has a unique risk profile that determines their willingness and ability to withstand risk. In general, as investment risk rise, investors expect higher returns to compensate for taking those risks. A fundamental idea in finance is the relationship between risk and return. The greater the amount of risk an investor is willing to take; the greater the potential return. Risks can come in various ways and investors need to be compensated for taking on additional risk. 

minimizing risk will avoid surprise attacks strategy help protect costs that one would have to pay

Fundamentals of Risk

Individuals, financial advisors, and companies can all develop risk management strategies. They do this in an attempt to reduce risks associated with their investments and business activities. Academically, there are several theories, metrics, and strategies that have been identified to measure, analyze, and manage risks. Some of these include standard deviation, beta, Value at Risk (VaR), and the Capital Asset Pricing Model (CAPM).

Measuring and quantifying risk often allows investors, traders, and business managers to hedge some risks away by using various strategies including diversification and derivative positions. Every saving and investment action involves different risks and returns. In general, financial theory classifies investment risks affecting asset values into two categories: systematic risk and unsystematic risk. Generally speaking, investors are exposed to both systematic and unsystematic risks. 

No investment is fully free of all probable risks, certain securities have so little applied risk that they are seen as risk-free or riskless. Riskless securities often form a starting point for analyzing and measuring risk. These types of investments offer an expected rate of return with very little or no risk. Often, all types of investors will look to these securities to preserve emergency savings or money that needs to be immediately available. Examples of riskless investments and securities are certificated deposits (CDs), government money market accounts, and U.S. Treasury bills.

capital risk can help with strategy conquest to avoid the significant risk to take over the world in this exciting game called life

Financial Risk

Systematic risks are also known as market risks, which can affect the entire market. Market risk is the risk of losing investments due to factors such as political risk and macroeconomic risk. Political risk and macroeconomic risk affect the performance of the overall market. Market risk cannot be easily controlled through portfolio diversification. Other common types of systematic risk can include interest rate, inflation, currency, liquidity, country, and sociopolitical risks.

Unsystematic risk is also known as a specific risk or idiosyncratic risk. Unsystematic risk is a category of risk that only affects an industry or a particular company. Unsystematic risk is the risk of losing an investment due to a company or industry-specific hazard. Examples of unsystematic risk include a change in management, a product recall, or a regulatory change that could drive down company sales. It can also be a new competitor in the marketplace with the potential to take away market share from a company. Investors often use diversification to manage unsystematic risk by investing in a variety of assets.

probability of classic risk is big in the world and the likelihood of a step closer to control cost in the risk game

Financial Exposure

Financial exposure is the amount an investor stands to lose in investment should the investment fail. Risk is knowing and understanding financial exposure. This is a crucial part of the investment process. Investors are always looking to limit their financial exposure, which helps maximize their profits. Financial exposure applies not only to investing in the stock market, but exists whenever an individual stands to lose any of the principal value spent. When an investor diversifies their portfolio effectively among many asset classes, it lessens overall volatility. If the market heads downward, then non-correlating asset classes will minimize the downside.

Time horizon and liquidity of investments is often the main factor influencing risk assessment and risk management. If an investor needs funds to be immediately accessible, won’t invest in a high-risk investment. This is because the investment would not be able to be immediately liquidated. This is why an investor would place their money in riskless securities. Time horizons are also an important factor for individual investment portfolios. Younger investors with longer time horizons to retirement may be willing to invest in higher-risk investments with higher potential returns. Older investors would have a different risk tolerance since they will need funds to be more readily available.

if you don't want to roll the dice on risk then you aren't ready for your biggest risk of having a risk legacy

Risk-Return

The risk-return tradeoff is the balance between the desire for the lowest possible risk and the highest possible returns. Low levels of risk are connected with low possible returns, and high levels of risk are linked with high potential returns. Each investor must decide how much risk they’re willing and able to accept for a looked-for return. This will be based on factors such as age, income, investment goals, liquidity needs, time horizon, and personality. It’s important to keep in mind that higher risk doesn’t automatically mean higher returns.

The risk-return tradeoff only shows that higher-risk investments have the possibility of higher returns; however, there are no guarantees. On the lower-risk side of the field is the risk-free rate of return. This is the theoretical rate of return of an investment with zero risk. It represents the interest you would expect from a risk-free investment over a specific period. The risk-free rate of return is the minimum return you would expect for any investment because you wouldn’t accept extra risk unless the potential rate of return is larger than the risk-free rate.

rules help countries purchase and manage risks and spread the secret mission to manage risk on the board game of life

Summary: Risk

Finding the right balance between risk and return helps investors and business managers achieve their financial goals. They make investments that they can be most comfortable with. That is exactly what you need to do when you invest in day trading find a number you are comfortable trading with in case you lost it wouldn’t break you. You also need to keep the contract size small until you get a feel of the market.  I can teach you how to day trade like the top 10% without a complicated strategy or any technical indicators, even if you are a beginner.

 My goal has always been to teach as many day traders to achieve their personal financial goals, whether they are novice traders or experienced traders. The MK VIP training has plenty of resources to help you get started on reaching your day trading goals. I teach the working class how to earn $10,000 a month through day trading.  I help my students avoid the challenges I faced when I first became a day trader; especially when it comes to dealing with risks. As of now, MK Financial LLC is already the #1-day trading coaching business in the US in just one year. You are just a click away from learning what you need to become a day trader with any amount of capital and take your life and salary to the next level.

Learn More

Maurice Kenny has helped over 600 people become financially free through one-on-one coaching, mentorship, and options trading strategy. Many of these new traders are now full-time traders, and they all started by watching his 1-hr webinar.

Feel free to check out other FREE educational resources to help guide you as you begin your new journey to financial freedom.

Also, download a (FREE E-BOOK) by Maurice Kenny, “DAY TRADE LIKE A MILLIONAIRE.”

Share this:

  • Twitter
  • Facebook

Like this:

Like Loading...

Related

Related Posts

How to Survive Trading in a Sideways Market
Day Trading Strategy

How to Survive Trading in a Sideways Market

Trading in a sideways market (aka consolidating or range bound market) can be frustrating for traders. Prices move within...

by Maurice Kenny
September 25, 2022
10 Common Candlestick Patterns: Add to Your Trading Arsenal
Day Trading Tutorials

10 Common Candlestick Patterns: Add to Your Trading Arsenal

Using Common candlestick patterns is a standard tool used by day traders to make informed decisions about when to...

by Maurice Kenny
September 25, 2022
How to Succeed with Momentum Day Trading
Day Trading Strategy

How to Succeed with Momentum Day Trading

Momentum day trading may suit you if you want to make money in the stock market. In this type...

by turbo617
September 25, 2022
S&P Average Return
Beginner

S&P Average Return

In general, when people say "the stock market," they mean the S&P 500 index. The S&P 500 is a...

by Maurice Kenny
September 25, 2022

Leave a Reply Cancel reply

POPULAR POSTS

  • supply and demand day trading - Maurice Kenny

    How to Draw Supply and Demand Zones Correctly

    0 shares
    Share 0 Tweet 0
  • Options Trading 101: Basic Course

    0 shares
    Share 0 Tweet 0
  • Engulfing Candlestick Pattern – How to Spot Reversals

    0 shares
    Share 0 Tweet 0
  • Contact
  • About
  • Terms Of Use
  • Privacy Policy
  • YouTube
  • Success Stories
  • Apply For Coaching
©MauriceKennyTrading

© 2022 MK Financial LLC - MauriceKennyTrading is an educational resource for aspiring day traders.

No Result
View All Result
  • Strategy
  • Options
  • Price Action
  • Indicators
  • Beginner
  • Psychology
  • Brokerage
  • Tools
  • Free Course

© 2022 MK Financial LLC - MauriceKennyTrading is an educational resource for aspiring day traders.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Add New Playlist

%d bloggers like this: