Top Tips for Reducing Stock Market Risk

The stock market is the best avenue for building wealth, especially over the last seven years with bond rates, GICs, and savings accounts providing investors with little or no fixed income. But there is always a trade-off; with higher returns comes higher risk. However there are many steps you can take to reduce stock market risk.

Volatility Risk

The stock market is a volatile place—It has to be if you want to make money. Without volatility, a stock price would stay the same. Even high quality stocks can experience volatility. The key is learning how to understand volatility and what makes stocks move up and down.

When it comes to reducing stock market volatility, time is on your side. The stock market goes up over the long run and is thus more volatile on a day-to-day or weekly basis. If your investment horizon is long-term, you’ll have a better chance at seeing positive returns. If you invest in dividend stocks, you’ll earn a quarterly income no matter what direction the market is heading.

It’s certainly not uncommon for a stock to experience a one to three percent price variation in a single day. During earnings season, the price movement can be even more drastic. If you’re a long-term investor, though, what happens in this particular quarter isn’t a big risk to you.

Understanding Fundamental and Technical Analysis

Another way to reduce stock market risk is to have a comprehensive understanding about particular stocks. When it comes to predicting future price movements of a stock or commodity, you can either consider a fundamental analysis or a technical analysis.

A fundamental analysis looks at a company’s financial statements to predict a trend and entry point: this could include looking at quarterly results, earnings, debt levels, and cash flow. While this takes a lot of research, it will provide you with a good idea about the financial health of a company and its operations and can help you decide whether the stocks are overvalued, undervalued, or fairly priced.

A technical analysis predicts future price movements based on patterns such as past price and volume. These patterns help investors identify trends to predict price gains or reversals.

Still, even with a large amount of data, learning how to read technical chart patterns is an art, not a science, especially when you can see different technical patters in one single chart. As a result, different investors can see different patterns; one could see a bullish trend emerging, while another could see a bearish trend.

Taken together, a fundamental and technical analysis of any stock can help reduce stock market risk.

Diversify Your Portfolio

If you want to reduce stock market risk, you need to have a diversified portfolio. The stock market is a great example of why it’s never a good idea to put all your eggs in one basket.

You might be bullish on precious metals and love investing in gold producers. This would of course pay off when gold trades higher. But if gold prices fall, your entire portfolio will take a huge hit.

A diversified portfolio reduces risk because it is spread out over a number of different sectors. Stock market sectors are just a way of classifying stocks and grouping them together. As a result, stock market sectors tend to be broad: Basic Materials, Conglomerates, Consumer Goods, Financial, Healthcare, Industrial Goods, Services, Technology, and Utilities.

Understanding different stock market sectors can help you identify which areas to invest in or avoid.

Learn-To-Trade.com: Toronto’s Premier Stock Market Trading Course

The best way to reduce risk on the stock market is to increase your knowledge by taking a technical analysis course in Toronto. The more you know, the fewer mistakes you’re likely to make. If you want to truly understand the broader stock market and reduce risk, you need to learn how to trade from stock market professionals.

Learn-To-Trade.com Inc. is the leading provider of stock market training courses in Canada. Led by licensed industry professionals, our instructors have an extensive understanding of the stock market and proven investing strategies that can help you make money when the markets are bearish, bullish, or moving sideways. That means providing you with the knowledge you need to create an informed, disciplined approach to the financial markets.

As the oldest financial educator in Canada, Learn-To-Trade.com Inc.’s instructors are also educators for the Toronto Montreal Exchange, through which its instructors host educational sessions for the major banks across Canada.

To discover how Learn-To-Trade.com Inc. can help you reduce stock market risk and make consistent, profitable trades, visit the company’s web site at www.Learn-To-Trade.com. You can also contact us by phone at 416-510-5560 or by e-mail at info@learn-to-trade.com.

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George Karpouzis is the co-founder of Learn-to-Trade and has been personally providing education and mentoring to over 3000 members since 1999. George has been trading in the stocks, options, futures and forex markets using technical analysis since 1986. With the help of advancements in trading technology the Learn To Trade program is now accessible worldwide. His background and passion for teaching brings an invaluable asset to our members. George is constantly striving to improve the program content and develop new strategic relationships for the benefit of the members. Add me to your G+

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Don’t hesitate jump into it right now. You will be glad you did!

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Susan C

Don’t hesitate jump into it right now. You will be glad you did!

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The ongoing support has been the reason for my success

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The ongoing support has been the reason for my success

Testimonial 3

I wanted to let you know that I had taken your course in the fall of 2013. I took your advice and used demo accounts for the last quarter of 2013. I switched to real money trading account in the Near Year, when I finally felt comfortable. Following the lessons taught to me by you (don’t jump on a moving train, peaks and valleys, EMA..etc), I wanted to let you know that I have been successful beyond my own expectations. Thank you very much – taking the Learn-to-Trade course was, by far, the best decision I made in my business career.

Steven R

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Steven R

I wanted to let you know that I had taken your course in the fall of 2013. I took your advice and used demo accounts for the last quarter of 2013. I switched to real money trading account in the Near Year, when I finally felt comfortable. Following the lessons taught to me by you (don’t jump on a moving train, peaks and valleys, EMA..etc), I wanted to let you know that I have been successful beyond my own expectations. Thank you very much – taking the Learn-to-Trade course was, by far, the best decision I made in my business career.

Joseph L

The past options and forex tutorials taught by George were very helpful. I find these tutorials invaluable for a busy person like myself. I was able to keep myself up to date and on track ready to continue the learning process. Thanks for all the help and keep up the great work.

Joseph L

Learn To Trade
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2014-08-20T10:36:37-04:00

Joseph L

The past options and forex tutorials taught by George were very helpful. I find these tutorials invaluable for a busy person like myself. I was able to keep myself up to date and on track ready to continue the learning process. Thanks for all the help and keep up the great work.

Harley S

The course is amazing. Where were you 30 years ago?

Harley S

Learn To Trade
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2014-08-20T10:37:39-04:00

Harley S

The course is amazing. Where were you 30 years ago?

Partick M

I learned the basics I needed to trade successfully.

Partick M

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Partick M

I learned the basics I needed to trade successfully.

Iouri G

I like making money. I’m very happy, so far so good

Iouri G

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Iouri G

I like making money. I’m very happy, so far so good

Akos B

I learned things it would have taken me years to figure out

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Akos B

I learned things it would have taken me years to figure out

Robert B

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There is always someone ready to answer my questions.

Uldus V

I was impressed with the course’s professionalism and enthusiasm.

Uldus V

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2014-08-20T10:41:40-04:00

Uldus V

I was impressed with the course’s professionalism and enthusiasm.

Dean K

I wish I knew about trading as a business years ago!

Dean K

Learn To Trade
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Dean K

I wish I knew about trading as a business years ago!

Peter P

Learn to Trade provided me with strategy, self-confidence and discipline

Peter P

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Peter P

Learn to Trade provided me with strategy, self-confidence and discipline

Shelley P

I took your course in 2008 and loved it. Since then I have been using what I learned at Learn-to-Trade to nicely supplement my pension income. Wanting a carefree type of trading, I have for the most part just sold options and made a monthly income which is a nice addition to my pension. I know I never would have made this kind of trading income without Learn-to-Trade. Thank you!

Shelley P

Learn To Trade
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2014-08-20T10:34:39-04:00

Shelley P

I took your course in 2008 and loved it. Since then I have been using what I learned at Learn-to-Trade to nicely supplement my pension income. Wanting a carefree type of trading, I have for the most part just sold options and made a monthly income which is a nice addition to my pension. I know I never would have made this kind of trading income without Learn-to-Trade. Thank you!

Amir

Hi George,

I just wanted to thank you again for the amazing work on the tutorials especially Options trading.   Prior to joining, I had underestimated the quality of the trainings but they certainly far exceeded my expectations. Only I wish I’d found you 5-10 years ago!
Learn To Trade
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2016-10-07T08:56:52-04:00
Hi George, I just wanted to thank you again for the amazing work on the tutorials especially Options trading.   Prior to joining, I had underestimated the quality of the trainings but they certainly far exceeded my expectations. Only I wish I’d found you 5-10 years ago!
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