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Risks of trading and investing

Let's start with a one-two punch:

  1. The financial markets are basically what is called a zero sum game. That means, what one gains must be lost by someone else.

  2. There are market participants that have advantages over the small private trader and investor -- you!

Who has the advantages?

The large players with the bigger resources!

They have employees working full-time for them. They also have the better data and are better connected. Often their traders have a special education. Not only from a university, but also from their employer, e.g., the big banks. Of course, they also have more capital that can buy them any other resource that could be useful to profit in the markets.

Conclusion: It is difficult to win in the markets for the small trader!

It may look so easy to you, but it isn't. Be cautious! Here are some things to consider first:

  • Important is a robust money management. Essentially that means thinking about the worst case and calculating whether you could withstand it or not. If not, either decrease your risk by putting less money into a trade or investment, or drop the plan at all.

  • Speculation with credit or on margin is generally problematic. Don't do it!

  • Financial instruments that work with leverage have to be understood fully. Otherwise you shouldn't use them at all.

  • Shorting something may result in an almost infinite risk. Don't do it, or keep your bet sizes very small.

And then:

A trading system that fits to you, trading tools that make sense, and useful information sources are among the things that may bend the odds to your favor...

Welcome to Tau Trader!

Finally we relay what an important government of this world thinks about trading and investing risks:

Investing and trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in any market. Don't trade with money you can't afford to lose. Materials on TauTrader.com and all associated sites are neither a solicitation nor an offer to buy or sell stocks, warrants, options, Forex or futures contracts, binary options, CFDs, or any other sort of contract, instrument, or financial asset. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on TauTrader.com and all associated sites and in its offered materials. The past performance of any trading system or methodology is not necessarily indicative of future results.

We have some other legal pages dedicated to specific items. They complete this page:

Good luck,

TT

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