1. Risks in Stock Trading

2. What does a Market Risk imply?

3. Market Risk This is the risk of investing in the stock market in general. It refers to a chance that a security’s value might decline Although a particular company may be doing poorly, the value of its stock can go up because the stock market value is collectively going up Conversely the value of the stock might drops because of negative factors inflation, rising interest rates, political instability etc.

4. What does an Industry Risk imply?

5. Industry Risk This is risk that affects all companies in a certain industry For e.g. Utility companies, are often viewed as relatively low in risk because the utility industry is stable and operates in a predictable environment with relatively little change In contrast, internet and other technology industries are usually viewed as high in risk because the industry is changing so quickly and unpredictably

6. What does a Regulatory Risk imply?

7. Regulatory Risk Virtually every company is subject to some sort of regulation. It refers to the risk that the government will pass new laws or implement new regulations, which will dramatically affect a business.

8. What does a Business Risk imply?

9. Business Risk These are the risks unique to an individual company It refers to the uncertainty regarding the organizations ability to perform business or provide service Products, strategies, management, labour force, market share, etc. which are among the key factors investors consider in evaluating the value of a specific company

11. All stocks within an industry are subject to industry risk