The Risk Tolerance in Stock Market
The most common perception occurs in investing in the stock market is that there is a very big risk in doing so. However, investment risks can be reduced in line with the good information we have, whether it is about the fundamental company and stock information on the current direction, or investment rules that we use in making investment decisions.
People can learn the risk tolerances to minimize the risk. There is a method called daily stock price method. If a stock reaches buy-point, but the average price of its stock is still below the line 50-day moving average, we will not put the stock in purchase indicators. The stock will not get the desired movement and the purchase value will often fail. If a stock is experiencing a rapid increase and the price range exceeds 100% of the average line of 200-day moving average, we’ll take advantage from it partially or completely. If a stock declined as much as 7% -8% of the purchase value – means the automatic loss-cut rules will be used. If the stock we’ve bought, after three weeks did not have the desired movement and its stock price fell below the line of 50-day moving averages, we will decrease the amount of investment in stages, waiting for another strong indicator that appears to indicate that the stock is eligible to be maintained for the long term.
From the method explained above, we know how to minimize the risk in investing. We will not also be suggested to buy shares if the market conditions in the state of downtrends or market is under pressure.
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