Diversification of risks in the market
Deeper and deeper into the specifics of trading on the currency market, the trader begins to monitor and predict the risks more thoroughly. Recklessness and thirst for easy money give way to a well-balanced and thorough approach. It's time to think about diversification of assetsIf you as a trader are concerned about risk insurance.
What is diversification?
Diversification - is, above all, the distribution of risks in different directions so as to avoid the loss of the entire asset portfolio or deposit in the event of an unforeseen reversal of the trend.
As a rule, diversification is considered by more experienced and experienced traders with medium and large deposits. It is partially explained by the fact that people with small financial assets come to the brokerage sites where there is an opportunity to start trading with a small initial capital, so it is unlikely that funds can be distributed in such a way as to diversify risks on a small account.
An example of diversification in the e can be the opening of several accounts in which funds are in different position/cash ratios and traded according to different strategies. An additional trading account will certainly be a distraction intraday, but if you don't want to keep all your eggs in one basket, you'll have to work hard.
Examples of diversification at
The most primitive example of diversification, and often used by traders, is trading currency pairs, which have different behavior on the market - For example, trading major pairs on one strategy, commodities on another, and hedging or gold on a third. All this can take place on the same trading account or on different accounts, the main thing is to use similar volumes.
An interesting option diversification of own funds The opening of a trader may become, in addition to deposit on The most important thing is that the currency speculators are also trading in the stock market or speculating on futures and options, but here we have to be very careful: the volumes of the stock market are inconsistent. Often currency speculators also trade in the stock market or speculate on futures and options, but you have to be very careful: the volumes of the and the stock market are incommensurably different, the level of risk is also different, although the principle of "buy low, sell high" is the same.
And of course you can invest in yourself - your education. This is an investment for the distant future, but it is most often justified, because no one will be able to multiply your money better than you.
Investing funds, if we are talking about a competent and balanced approach and counting on a long-term fruitful work, is an activity like any other, so the thought of hedging risks are necessary for those who intend not only to multiply, but also to preserve the funds they already have. It is also worth noting that in order to optimally diversify funds into a different sphere, you need to understand it at least at the level of understanding of its functioning.