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Thread: The investor risks

  1. #1
    Super Moderator Gulfstream's Avatar
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    The investor risks

    The investor risks

    Today, the trust asset management has a wide propagation on the global financial markets. These services are provided to corporate and individual customers by traders.
    In marketing campaign traders describe the advantages of trust asset management tolerably well, but they rarely mentioned about possible financial risks for investors in this sector.
    We will not consider the advantages of the trust asset management because they are available in any commercial article, posted in the Internet and in other media. In this topic I want to focus on financial risks for investors in the trust asset management.

    Firstly, investor should know that the activities on financial market, particularly on Forex, are not just high return but also very risky. Therefore, he must be ready for the fact that in this area it can not only make good profit, but at any moment to lose all capital.

    Secondly, investor should take the precautions for minimizing risks before delivered his funds in trust asset management:

    · to diversify your funds (allocate invested fund). Its like "Do not keep all eggs in one basket"
    · examine the company in which you plan to invest ( check the registration address, the existence of license, reviews, conditions of cooperation etc.)
    · while choosing trader, whom you plan to trust your funds, check carefully his personal and professional information ( Name, passport, place of registration, reviews, statements, the strategy of trading, how he follows the rules of risk-management)
    · conclude the contract

    If with first three are clear , the last one will raise several issues with which we will try to find out now!
    “Do I need to conclude the contract?” – it should be the first investor question.
    In my opinion, it is obligatory to conclude the contract.
    At first, further relationship will be conducted only according to the concluded contract.
    At second, if the contract was completed in details, it will be less divergence and misunderstanding between sides.
    However in some companies concluding of contract isn’t practiced.

    What does it lead, you ask?
    This is an exhaustive answer to this question:
    In most cases, the deposit is burned, which formed enough decent sum of purse, and total lack of such initiators act( not heeding the investor).
    In this case dealing center or broker company will be not in the business, and it will be difficult to find trader, and especially to be brought him to justice.
    In addition, the absence of duly formalized contract promotes increasing the chance of an investor «to get into the hands» of fraud. It should be remembered that the existence of the contract only reduces the chances of the above, but not completely exclude them. But in any case, the existence of the contract - it's better than nothing.
    Therefore, the investor must be highly responsible approach to the selection of the company and the trader, whom he is going to trust their money. Often the wrong choice made leads investors to disastrous results. To illustrate, as an example, here is one of fraud scheme as a result of which the investor is "with nothing."
    The situation is simple. So-called trader-scammer finds 2 and more investors (intended victims) and by the way of theirs persuasion in his professionalism and big experience in financial markets, gets in control theirs accounts. Then, without giving details of technical or fundamental analyses, trader opens positions. At one account buy order is opened and, at the other – sell order for the same asset, it means two deals are opened at both accounts in opposite sides. By the end, one account has significant growth of the start-up, and the other has equivalent losses, the worst case – full burning of the deposit. The investor, who had the less lucky, splits up with the trader, lost all his money, and the last – gets his award from the investor, who had profitable positions.
    Further action of trader is going by well-established scheme. Meanwhile profitable investor account could easily turn in to unprofitable. But pseudo – trader will not worry for this, he have been rewarded already without any effort.

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  2. #61
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    Each venture conveys certain dangers alongside them. There is no protected venture that has definitely no dangers of you losing cash. The greatest venture chance is that of losing cash. As the market is exceptionally unpredictable, you can never make certain about the estimation of your cash after a state of time. You remain to lose most or even the majority of the cash you put in for the speculation. Another significant hazard is you being deceived or mis-sold a speculation strategy. There are numerous moneylenders who have a tendency to celebrate the speculation and guarantee significant yields. At last, they flee with your cash, leaving nothing for you at last.

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  3. #62
    Trader snnaky's Avatar
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    Success in trade is the accumulation of all knowledge experiences and avoid many mistakes and the stubborn trader has no place in the trade. The one piece of advice that I can give to newbie trader is to learn and practice using Demo accounts to have more knowledge in the business.
    You must always bear in mind that Knowledge is the key to success!

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  4. #63
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    Quote Originally Posted by snnaky View Post
    Success in trade is the accumulation of all knowledge experiences and avoid many mistakes and the stubborn trader has no place in the trade. The one piece of advice that I can give to newbie trader is to learn and practice using Demo accounts to have more knowledge in the business.
    You must always bear in mind that Knowledge is the key to success!
    personally as a swing trader in this business of trading the makret,i believe trading is more about investing,though trading is not easy and before one can think of investing money in this business need to have made time to learn and understand how to handle the pressure of trading and this is why it safe to spend noting less than 6 month to understand how to trade the market.

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  5. #64
    Trader mexima's Avatar
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    i think you don't have to set the target of high return and the money management method is only made for that to minimize risk if you think you can easy high then you have to take high risk how ever you can loss every thin because of the greed of high return i must say to used long term stretigy to earn long term instead of short term high profit :)

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  6. #65
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    With the increasing number of financial markets, people around the world are receiving good earning facilities from their investments. But no investment is free from risks: a trader must evaluate the risks potential of an investment opportunity before he can make investment. Even in my opinion it is favorable to use relative valuation like Co-efficient of variance to evaluate my investment opportunities to over-view the risk return perspective in one frame.

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  7. #66
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    Forex is a risky market. in my view it is now mandatory for all brokers to mention that investing in Forex and other related financial market entails risk and can result in the loss of funds. However in many places and many brokers we still find that they elucidate well about the advantages of the Forex market and the possibility to secure an unlimited amount of money here, and at the end they just mention a line about the risk involved in trading. Well the fact is all depends on traders skills and mindset.

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  8. #67
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    It is even risky not to take risk but as different investors have different risk tolerance, each one should consider carefully before delving into the forex or any spot market. It is compulsorily stated by every broker and any outfit that has anything to do with the market to expressly state the substantial risk involved in trading. Moreover it always advised to risk only an amount that one can conveniently lose without any ado.

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  9. #68
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    Thanks great information it is very useful for old and new comer

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  10. #69
    Trader xauyuro's Avatar
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    Quote Originally Posted by Gulfstream View Post
    – Its quite difficult question, which is hard to give univocal answer.
    I would say in such way, grammatically drawn up agreement will decrease investors risks and will help prevent full burning of his principal.
    In order if the agreement has ponderable effect and the investor works with it easier, it is essential to clarify some nuances.

    First nuance
    . It is essential to conclude the agreement with the company or trader, who are residents of that country, which investor lives in. It will be better if the company or trader has the same location as investor ones.
    Thus, in the case of court proceedings, investor simplifies vastly the task with filing of a claim to the court in connection with appearing moot questions (situations) of the concluded Agreement execution.

    Second nuance
    . Upon conclusion of the Agreement investor must determine with the drawdown level, it means identify for yourself the acceptable risk level. In this case he must think and decide which losses of the investing are acceptable for him.
    However it usually happens that trader, in spite of the prescribed risk size, many times exceeds it.
    Setting the maximum size of the drawdown, the investor restricts his fund from further losses.
    However it usually happens that trader, in spite of the prescribed risk size, many times exceeds it. But it is next nuance.

    Third nuance. In order to the investor could protect his favors, just conclude the Agreement is a little. He must have the notion, where he invests his funds and how the system works.
    Open trading account, transfer money on it, give accounts’ login and password from to trader, and then just sit and wait, when the income starts growing on this account – it is enough irresponsible relationship to the own fund, especially if it amounts a significant purse.
    Investor must monitor all operations, performing on his trading account, if unforeseen situation happens, he can pass any decision, which would let him somehow save his fund and save from further losses.

    Fourth nuance
    . You should be careful and responsible with choosing company or trader, who guarantee the protection of investor funds and offer a huge profit level. Perhaps there are frauds behind these persons. It will be difficult to brought to justice this trader even if you contract is concluded well, because he figured everything before.
    It will not to much to repeat once again that the activities on financial market, particularly on Forex, are not just high return but also very risky.
    This means that any real guarantees for the preservation of capital, no trader can not give (otherwise he would go down, and it is not in his plans). Due to its professionalism, it can only reduce his risk of loss. To do this, there are rules of risk management, which he should follow.
    The same applies to profits. Trader can have not just profitable trading’s but also losses, because we can’t predict all market moments. Otherwise, the trader will fast become a millionaire and wouldn’t manage other people's funds.

    The Golden Rule
    works here:
    The more investors want to get profit, the higher is risk of losing capital and conversely, the lower –the less profit it receives.

    I fully agree with what was written in this thread. investment in any form must all have risks. Therefore, as a potential investor, you must really understand what risks you will bear if all investment plans do not go as expected. so also in this forex trading business.
    because all possibilities can happen. for example, with minimal knowledge you are desperate to jump in forex trading, this is just like you kill yourself. or if you invest in the wrong broker, the broker is a scam where you will lose your funds, or manipulate your trading so you experience a loss. therefore be a smart investor, a smart trader.

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  11. #70
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    This is quite a nice post and very informative to every trader especially traders thinking they can start making money from day 1 in this business forgetting the risk involved.Forex as a market is very risky and any trader that will be successful eventually will also be mindful of the risk and know how to manage it.Your post very great and i must commend you for that.

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