Risk and Reward: 10 Tips for Assessing and Managing Investment Risks

5. Use Stop-Loss Orders

A stop-loss order is a trade order to sell a security once it reaches a certain price. This can help you minimize losses in volatile markets.

Using stop-loss orders can be an effective way to manage investment risks, especially for short-term traders. However, it’s crucial to set your stop-loss orders carefully to avoid selling assets at an inopportune time and missing out on potential gains.

6. Monitor Interest Rates

Interest rates can significantly impact various investment types. For example, bond prices are inversely related to interest rates, while high interest rates can negatively affect stock prices.

By keeping an eye on interest rates and monetary policy, you can better assess the risks associated with your investments. This can also help you make timely adjustments to your portfolio to mitigate these risks.