What are the risks involved in Trading?

Investing on your own carries risks. You could potentially lose part, all, or even more than your initial investment. Therefore, invest only money that you do not need immediately.

Market Risk: This is the risk of fluctuations in the prices of investments. Prices change constantly, and you always face market risk. You can somewhat reduce this risk by diversifying your investments.

Credit Risk: This is the risk that the company or country you invest in may not be able to meet its payment obligations. For example, they might no longer be able to pay interest, or the investment could become worthless.

Liquidity Risk: This is the risk that investments cannot be easily traded on the market. If investments are not 'liquid,' you may not be able to sell them quickly or at all. This means you cannot freely access your invested money or might have to sell at a lower price.

Market Risk: This is the risk that investments decrease in value due to economic developments. For example, a decline in economic growth can lead to a reduction in the value of a company. This can cause the company’s stock to lose value.

Interest Rate Risk: This is the risk that the value of investments will decrease if market interest rates rise. A rising interest rate can lead to reduced consumer spending and higher interest expenses for companies. This can put pressure on company profits, negatively affecting the value of stocks, bonds, and investment funds that hold these securities.

Currency Risk: This occurs when you invest in a currency other than the euro. If the value of that foreign currency falls compared to the euro, it negatively impacts the value of your investments in that currency.