Nifty futures are highly fluctuating trading segment thus it contains higher risk. However nifty futures spot two types of risk- systematic risk and unsystematic risk. You can automatically spot both the risks during trading the nifty futures. There are various reasons of declining price including declining revenue, declining profit margins, higher financial cost, high leverage, and management misconduct.
All the reasons represent a form of risk, there may be other similar reasons. However, these all risks are a company specific risk. The risks which affect only the company not others, the risks are grouped in unsystematic risks. Unsystematic risk can be diversified. A trader can choose to trade diversified by opting some of the 50 companies in nifty futures. By doing these, unsystematic risks reduce drastically.
The higher the number of stocks, the higher the diversification and the lower the unsystematic risk. The risk which is not reduced after diversification, the risk called systematic risk. The risk which is common to all the stocks is called systematic risk. Systematic risks are the macro economic risks which affect the whole market.
The systematic risk includes de-growth in GDP, inflation, fiscal deficit, interest rate tightening and geopolitical risk. Systematic risk is inherent in the system and it cannot be diversified. However, systematic risk can be hedged and hedging is different from diversification. If you are thinking about to trade in nifty futures then you have to be knowledgeable of all these things. You can also take help from an expert which would be better for you to learn at the initial level.
If you are looking for one of the best nifty futures experts then Money Classic Investment Advisors is the leading company which offers industry’s best recommendation on nifty futures.
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