Class-4: What are the risks of investing in stocks?

Let us take an example of Cricket where the significance of an opener is particularly important in Test Matches. Opener while batting first is able to study the opposition bowlers and the nature of the pitch.

During the first few hours he will be able to identify risk associated with bowling and playing certain shots, and how to proceed for the whole match.

His observation not only helps him, but also his teammates, as he is able to identify the risks in the pitch and communicate it with other players. The most successful of teams in cricket had great openers, due to their ability to identify risk and manage them.

As in Cricket, the importance of Risk Identification is equally important like choosing the companies for Investment. Managing and analysing risk helps a person to minimize the losses he may suffer in an investment, maximize any profit-making opportunity, and improve the chances for a better return.

Therefore, the first step for a judicious risk planning in investment is the identification of potential risks.

• What type of risks would affect the industry?
• Risk impacts are the same for all companies or do they differ for different                     companies?
• To what extent will it impact your investments?
• What are the different levels of risk?
• What is Commodity risk, Headline risk, Inflation risk, and Interest-rate Risk?

We should know what will impact our current and potential investments, to what extent, and what steps should be taken to minimize its impact.

If you want to gain knowledge over these things and safeguard yourself from potential stock market losses, watch the Fourth class of our course, and gain useful insights.

In order to know more and learn about trading and investment in the Indian stock market, sign up for a complete video course by Kundan Kishore titled "A Complete Course on Indian Stock Market”.