There are several types of risks involved in stock trading. Market risk refers to the possibility of a security's value declining due to overall market fluctuations. Industry risk affects all companies within a particular industry, such as utilities facing less risk than technology. Regulatory risk involves new government laws or regulations significantly impacting businesses. Finally, business risk is unique to each company and involves uncertainties around their products, strategies, management, and other internal factors. In stock trading, all stocks face market risk, industry risk, and regulatory risk, while business risk depends on the individual company.

1. Risks in Stock Trading

2. What does a Market Risk imply?

3. Market RiskThis is the risk of investing in the stock market in general. It refers to a chance that a security’s value might declineAlthough a particular company may be doing poorly, the value of its stock can go up because the stock market value is collectively going upConversely the value of the stock might drops because of negative factors inflation, rising interest rates, political instability etc.

4. What does an Industry Riskimply?

5. Industry RiskThis is risk that affects all companies in a certain industryFor e.g. Utility companies, are often viewed as relatively low in risk because the utility industry is stable and operates in a predictable environment with relatively little changeIn contrast, internet and other technology industries are usually viewed as high in risk because the industry is changing so quickly and unpredictably

6. What does a Regulatory Riskimply?

7. Regulatory RiskVirtually every company is subject to some sort of regulation. It refers to the risk that the government will pass new laws or implement new regulations, which will dramatically affect a business.

8. What does a Business Risk imply?

9. Business RiskThese are the risks unique to an individual company It refers to the uncertainty regarding the organizations ability to perform business or provide serviceProducts, strategies, management, labour force, market share, etc. which are among the key factors investors consider in evaluating the value of a specific company

10. Risks in Stock TradingRemember: All stocks are affected by market risk

11. All stocks within an industry are subject to industry risk