The risks when investing in the stock market
Investing in the stock market is a highly profitable but also highly volatile, so you must be patient and knowledgeable, the two features that should have every investor. Also keep in mind the risks involved when buying or selling stock, which I present below.
Financial markets offer good opportunities for small investors to make big money speculating. But losing it, so keep in mind these risks.
1. Complexity
As financial engineering becomes more complex, more difficult it is to successfully navigate the small investor. Products and markets are not designed for retailers and, in any case require a large degree of knowledge. Otherwise, you can go wrong, very wrong.
2. Illiquid
Financial derivatives are characterized by low liquidity. You can not buy and sell with ease and immediacy that allows the bag and there is serious risk of being caught.
3. Leverage
More sophisticated financial products allow a strong leverage. That is, we buy a lot, but paying only a part, this is the leverage effect: moving a lot with little force. Yes, the losses are real.
4. Counterfeit currency
The currency market is one that has a higher level of risk. It is the favorite habitat of large speculators. To invest in a foreign currency must know very well the reality of the country and the risk of collapse.
5. Volatility
These financial products bear a high degree of volatility, i.e. swings and fluctuations that raise or lower prices so crazy. It is very difficult to keep calm and not get dizzy when the sea is churning.