Rabu, 28 Maret 2012

Risk Management Method of Investing and Trading

1. Trading Risk Management :

Trading generally performed by a retail investor who is short of 15 minutes to 1 week and always use technical methods of the various indicators of existing graphics. When trading, an investor Forex and other financial fund to double the capital, and risk of loss not only as a potential revenue, but also the money invested. Deviation from the average yield is expected to determine the risk of investors in financial markets. Trading irregularities can bring higher profits but also losses.

Financial risk management trading does not offer a guarantee of success, but together the important parts of it. Each activity in the financial fund industry market, including Forex is risky. That is why the use of risk management methods will be able to reduce the potential for large losses.

   1. Determine the position Stop Loss and Target Price is fixed;
   2. Adequate capital investment with a good distribution of the portfolio;
   3. Trend line analysis and make the right trading;
   4. Managing Emotions in a controlled manner so as not to overdo it.

Risk management methods used after opening a position. The main risk management method is the delivery order which hold large losses. So do cut loss if the loss is too big and not be covered in a short time, unless you have sufficient capital to hold it so as not exposed to margin loss of availability of your funds on the trading positions taken.
Stop-loss (literally means to stop the loss) - is a point where a trader out of the market to avoid a catastrophic situation. You should set stop-loss when opening a position to prevent the loss, because of market volatility is very large and often volatile fluctuations up and down at intervals with great prices.

- There are several types of stop-signal :

* Stop the initial signal will determine the amount of deposit or interest rate that the trader is prepared to lose. When prices move towards this position and achieve it, the position of a fixed level, merchants can close it and do not exceed the loss had been determined earlier by the trader.
* Forgot to do a stop signal is when price is moving towards a position, and a stop signal is determined later, according to the merchant's preference. Must do change direction, if the price reaches the signal, and traders out of the market and profit earning potential (depending on when the price starts to move).
* Profit when demolition is pure profit has been obtained, and the closed position.
* Stop signal at the time was when, in course of time, the market is not capable of providing a benefit that is required, then the position needs to be closed.

2. Investment Risk Management :

Is a form of investment business activities are long-term (1-10 years) in which the investor would put funds to make a profit. Long-term business activities is also related to the readiness of large capital, professional management, technology, human resources and many other things. It also includes business financial fund, where investors invest substantial funds in the long run. As such investments will face many external and internal challenges that all goes well and smoothly. Normally the investment is in addition to setting up a large capital base, has always been supported by a grant of credit from banks and other financial institutions so that capital will be entirely met by the capital structure of the capital of 20-40% are loans amounting to 60-80% for professionally managed. Actual capital structure that is inherently unhealthy is 60% equity and 40% credit, so that credit risk will also decrease. But unfortunately with the science of financial engineering, financial experts even want to get a great leveraging but with little capital. Is experienced by many companies and the state of real and financial fund that is now experienced by developed countries and multinational companies with a debt crisis is a difficult issue paid in full. To the State can still issue treasury bills for the support of the IMF and the region remains at risk despite the default (default). Was for real and financial companies receiving bailout money (bailout) from their own country, selling high-yield bonds, debt swaps, mergers, sell some stocks on the cheap, selling subsidiaries or divisions may even be liquidated because its debts are almost through authorized and guarantee credit. The greater portion of the credit, the credit risk will be the greater. In the investment business, the company will still face internal risks (operational) and external risks of the macro economic impact in the form of interest rate risk, inflation risk, forex risk, credit risk, market risk, business risk and the risk of competition and the entry of new comers, new products and new technology.

For that course, the company must manage its business should always consider the risk factors above that companies can avoid the risks and issues of loss, failure and defeat in the market, credit risk and often have mortgage arrears rate on loans that have to rollover even in refinancing to increase the capital as part of the capital base (own) and got a lot of credit erosion of internal and external risks. As well as the risk of trading, the investment risk will be much more risky because it involves capital and a larger credit. In the economic sphere, the business will always be fluctuations in the long term for being anticipated by the company that did not run the risk of losses to bankruptcy. Management must be good at gathering and formulation of business strategies in order to survive and even continue to grow organically and be able to expand the business well and correctly.

So the company should always monitor the progress of the risk of fluctuations in various professional manner and method that is more precise and managed so as not always entangled in an issue and the risk is to continue to survive. Management must have completely of the micro and macro analysis on the range of possible fluctuations, changes, upheavals and crises to be faced in the future in the period 1 - 1o years with various creations and innovations in order to continue survive, a winner, even one step ahead one leap ahead. A variety of data must be analyzed in a complex, holistic and comprehensive in order to recognize the strains of business fluctuations, macroeconomic, consumer tastes and competition with higher quality type of product and competitive prices. Similarly, business investment in the financial fund also must be learn and analyze a variety of macro economic data in order to determine the type of business financial fund which provides enough long-term benefits are not affected by short-term price fluctuations. So the buying and selling will be right in her prediction that prices will go up or down for several months, quarters, semesters or even years, so it will get the optimal benefit without losing meaning.

Given these risk factors, the company should be more familiar with the dynamics and fluctuations in the share market, macroeconomic and all variables are always dynamic and volatile with frequent turmoil and economic crisis, social and political well-managed wisely based on a vision that far into the front of the condition of the development of internal factors and external variables with a variety of business strategy and method of the business model of SWOT, TOWS, BCG and other models to restructure in order to survive the material becomes more developed again.    

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