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The most risky assets (part 1)

The most risky assets (part 1)

Many of those who come to the stock exchange immediately begin to chase super profits, often not realizing that the higher the income, the higher the risk. Such a trend is absolutely natural, because cinema and literature almost always draw investors as absolute slackers, adventurers and crooks and it is simply impossible to believe that all this noble brotherhood constantly counts every cent and chases hundredths of a percent.

 

But in fact, it is. Of course, you can find many examples of brilliant transactions, making which, the guru of the stock market received a profit of several hundred percent, but this is more of a lucky coincidence than a pattern.

 

After all, investors earn mainly due to large capital and a lot of low-risk and not very profitable transactions, and not two or three super-profitable investments, and the main characteristic that they pay attention to is the probability that they will earn.

 

Today we will talk about very tempting, but extremely risky assets, past which a competent investor will most often pass by or, at least, quite seriously think about whether it is worth it.

 

Derivative financial assets

 

You should also be quite cautious about derivative financial assets, such as CFDs, options and others. The fact is that the exchange market itself is a rather complex mechanism, which even a professional can predict with a rather serious error.

 

That is why all platforms pay special attention to the risk that any transaction made on the stock exchange carries. But how then do investors make money?

 

Everything is very simple, they try to level the risks, try to build their investor program so that even in the most unfavorable case to get some profit or at least not to lose anything.

 

Such a policy is quite easy to adhere to, if you are dealing with basic trading instruments and vice versa, it is extremely difficult to get rid of risks when it comes to derivative financial assets.

 

Suppose you have the opportunity to purchase 10 shares of Company A, which you assume should soon grow in price a little. But for the same price, you'll be able to buy 20 derivatives and, if all goes well, double your possible profits. It would seem that the choice is obvious, but everything is not so simple.

 

Of course, if everything goes according to your plan, then, choosing the second option, you will enrich yourself, but if suddenly the forecast turns out to be wrong - you will lose everything. Consider the same for ordinary stocks, if they rise in price - you will earn good money. Yes, of course less than they could, but if suddenly, the shares do not grow, then you will not lose anything, and if they fall in price at all, then, having sold them out in time, you will lose quite a bit.

 

To be continued...

 

Today we partially considered a rather voluminous topic, which the format of our blog did not allow us to fully cover, so this material will be divided into two articles and you just read the first of them.

20.07.2021
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