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Tuesday, 8 December 2015

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How to Minimize Risks While Trading

One of the important facts about the stock trading is that it is always accompanied with great risks. Thus the traders are always in search of trading strategies which involves minimum risks. Some of the techniques which involve minimum risks are:
1)      Long Term Investments
2)      Diversification of Portfolio
3)      Arbitrage techniques
4)      Spread techniques.
Out of the various styles of trading available for the traders including the intraday trading, the short term trading and the long term trading, the long term investment is considered to be a risk free style of trading. The long term investment in good companies has always given positive results. In the long term investment the investor buys the shares and keeps it for a long time. The period of holding usually ranges in years. The long term investments with a diversified portfolio minimize the risks to a further extent and are most likely to give a positive result. The diversification prevents the trader from incurring heavy loss when the price levels of Shares of a particular sector falls.
Besides the long term investment there are strategies which are considered to be Risk Free. The arbitrage and the spread techniques are the common among them. In case of arbitrage the price difference between the price levels of same stock in two different exchanges is considered. One of the stocks on the exchanges with higher price is sold and the other one with low price is bought. Thus the trader incur a fixed profit at the time these buy and sell calls are placed. In case of spread technique the same stock is bought and sold.

The above mentioned methods are extensively used by technical analysts in financial advisory firm like Money Classic Research to provide accurate Stock Market Tips. Money Classic Research is a SEBI registered advisory firm which is also ISO certified.

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