Monday, May 27, 2013

Stock Market Trading and Risks on Trade

What are the investments tools traded in the markets?

In the Indian stock market, there are many forms of investment tools are available and creating confusion to select best performing or highly yield savings investment plans and schemes among the small caps, mid caps, large caps, Shares, stocks, secure bonds, saving certificates, Futures and Options, Mutual Funds, commodities etc.


What are the trading risks to understand before starting stock trading?

After stock trading, there are some controllable and non-controllable risks on trade will come themselves. Here is the list of various risks after starting the stock trading. They are,

·         Regulatory Risk
·         Market Risk
·         Business Risk
·         Industry Risk

Regulatory Risk

Basically every listed and non-listed company is follows its own rules and regulation and changes according to various factors like industry growth, local government laws, investors trends, time and market situation and market performance, implementation of new technology etc. Generally these regulations are planned to avoid the oncoming losses of company business.

Market Risk 

Stock market is subjected to change always based upon various causes. Foreign investment, local citizens involvement, company performance, company business development plans, foreign orders, outsourcing projects, investors trust, stocks trend, political uncertainty, crisis, inflation, changes in currency value, alteration of interest rates etc. are highly affects the market trading. Whole stock market will subjected to impact to a huge level.

Business Risk

Each company entirely get affect when the relevant or belonging industry under goes massive impact with various factors like market competition, market share, marketing strategy, organization management, sales force, product performance, brand awareness, advertisement, customers reviews, modifications in service or products, political strikes, bundhs, employees behaviour etc. factors brings business risks. These business risks causes are matchless to each company or sector.

Industry Risk

These kind of risks affects all belonging companies in a particular industry. For example, If US and Europe countries passes a bill on stopping the IT projects for outsourcing, the entire software, hardware industry will get massive impact. A number of small and medium IT companies will face threat of survive. Both fresher and experienced software programmers and non-programming employees will lose their jobs. A true example is 2008-2009 financial crisis, 2012-2013 US’ Obama bill on IT outsourcing. After these two incidents the entire IT software industry got changed and all IT sector companies stocks still under industry risk.

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