Trading Knowledge

Expand the knowledge of trading, improve the level of trade, let you trade confidently, in the series of educational articles provided by Pacific Union.

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Low risk investments will have lower return potential than high risk investments.

Low Risk = Potential Low Return
Medium Risk = Potential Medium Return
High Risk = Potential High Return

Your trading style will often define how low or high risk your strategy is but even the greatest investment/trading strategies are of little help if you do not control risk

How tough are you?
Your Risk Tolerance is the degree of uncertainty you can handle regarding a potential loss or decrease in your investment portfolio value

Risk tolerance will be different for each person and how much you can handle generally depends on three things;

  • Income – Your personal income and personal situation
    e.g. A person on a low salary about to get married will be likely to have a low to moderate risk appetite and will therefore most probably have lower risk capital available than a single person on a medium salary
  • Time Horizon – The amount of time you plan to keep your money invested. Longer time horizons are associated with less risk than shorter time horizons
  • Investment Objectives – The greater your financial goals, the greater the risk you will likely have to take on

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