What Are The Risks Involved In The Stock Market?


Investing in the share market involves a specific degree of risk. However, it has the potential for significant rewards. Investing in the stock market entails several risks, including market, company, inflation, and liquidity risk.

Market risk is the chance that an investment may lose value due to shifts in the market. Political unrest, changes in interest rates, fluctuating currencies, and inflation are just a few causes of this. 

Interest rates impact both the cost of borrowing money and the value of equities. For instance, borrowing money becomes more expensive when interest rates rise, which can lower a company’s earnings and affect the stock price.

In the stock market, liquidity risk is the possibility that an investor cannot quickly buy or sell equities.

Moreover, a risk of a reduction in the buying power of investments due to rising prices is known as inflation risk in the stock market.

These risks are also there with intraday trading. What is intraday trading? Intraday trading is the practice of buying and selling stocks on the same business day.

In addition, exchange rate risk refers to the possibility of losses brought on by variations in foreign currency prices. The risk arises when a business makes foreign investments or has subsidiaries abroad. 


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