How to do Safe Trading in Financial Market

Risk management can never be ignored when we talk about trading whether it is manual or algorithmic. While in manual trading chances of risk are higher, in algorithmic it gets reduced several notches.

However, in both the styles, being careful is of the utmost importance. That is why all the traders and investors deploy risk management strategies.

Risk management is a technique that uses a mix of various styles of investments within one single portfolio. The logic behind this technique is that if a portfolio compromises of various types of investments it will go on to yield higher returns as well as lower down the chances of risk.

If a person has invested in one single investment then the chances of winning and losing will be 50-50.

On the other hand, if a person has invested across multiple portfolios then even if the price of one financial instrument goes on, the others will remain unaffected. It is based on the rationale that not all the financial instruments and their prices are affected simultaneously.

This is one of the practices to be implemented when it comes down to managing risk in financial field.

We can compare this practice to not putting all the eggs in one basket, because if one basket accidently falls down all the eggs will be broken. Same way not placing all the money into one portfolio will save the person from losing all his money in one go.

Dragon Holdings is a German company that provides risk management solutions and a part of Niraj Goel’s Clone Algo Group.

Dragon Holdings

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