Stock Trading

Why is it important to Spread your Risk?

Spreading risk is critical to long term success in stock trading. If you have invested your entire savings into one company and that company’s stock falls by 50%, you have lost half your savings in one go. If you have spread your risk by investing in 4 companies, and one of the companies stock falls by 20%, you only lose in one area. Spreading risk assures you that if a stock goes down you have others to balance your situation.

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