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2006-12-18 01:53:43 · 1 answers · asked by dang h 1 in Business & Finance Investing

1 answers

The risk to "investigate" in the stock market? Some time that you spend in reading.

There are risks. But for simply buying a stock and selling (called cutting your losses) when the price falls too much because of bad news or an impending bankruptcy (hopefully, you will choose to invest in companies that make profits, not perpetual losses), you may lose some but not all. Options and derivatives, meanwhile, are very risky and you can easily lose more than you venture when things go differently than you hoped. Still, the only way you lose more than you venture in options is, say, you let a call (an option to purchase a stock at a set price) expire and your brokerage might have a practice of exercising uncancelled calls--then you will have to cough up the price for the 100 shares (per call contract) at the price you agreed on--but then you still have 100 shares of the stock, so technically it isn't a loss, though it can be an unanticipated outlay if you don't know what you are doing.

In short, investigate, check it out. Then try it with what you know to the extent you can afford. But don't risk anything you can't afford to lose, okay?

2006-12-18 02:35:09 · answer #1 · answered by Rabbit 7 · 0 0

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