There are risks regarding any kind of business, especially financial trading.
Risks management is always rewarding.
The 4 kind of risks that I see:
- Risk of the trade, the obvious one.
- Risk of an expected event: Earnings, economic announcements, war (most of the time), ...
- Unexpected risks: Power failure, Internet failure, broker system crash, flash crash, panic like 1987, ...
- Risk of not knowing and lessening to ourselves (doing the same think over and over and expecting a different outcome or doing different things everyday trying to find the holy secret)
Some events can be expected or unexpected, like governments decisions, Central banks decisions, geopolitical events, civilian wars etc.
I you trade long enough, you will encounter all kind of risks. Most of the time, unexpected risks are called "black swan", "market randomness", or "silent risks".
Unfortunately, most of us will not even take all of them into consideration, before something really bad happens.
I am no exception and if I think "risks first" now, well, it is because something really bad happened to me years ago, when trading.
Retail traders or "small players" have an unique opportunity to manage risks by limiting exposure. Most of the time, they do just the opposite, overtrading, huge leverage, trying to copycat the big players with "diversification".. They will learn all the good stuff like, keep your stops tight, if you invest long term nothing matters as the market rewards the patients, black swans are part of life, markets are efficient, what we don't understand is just noise, the FED is our friend, October is the worst month, a good money management is key to profits, etc.
Of course, so many think learning the traditional way (academia style) as much as possible is how a trader will succeed. IMO, they should ask themselves why teachers are not rich trading?
On a positive note, opportunities often come from risks.
Best!
