Right now cryptocurrency is less volatile than the stocks. But this may change anytime. Remember how Bitcoin went up to $10,000 and than rapidly fell to $4,000? In my opinion, this situation may repeat.
Wed 6 May, 2020 03:01 am
Risk is a relative term.
The stock market would indeed be risky is you were buying stock like throwing darts blindfolded at a dart board.
In reality, an intelligent person wouldn't buy a stock that way, including buying a stock because your cousins best friend told you it was a good stock.
If someone tells you to buy such and such a stock, your first question should by "Why?"
If the other person can't give you reasons that shows they have studied the financials of the company, they are just talking out their hat.
Instead, you learn how to determine yourself what would be good stocks to buy (not going to go into this with you, as you are never going to do any of this)
You also set up safe guards to keep you from losing all your money.
For instance, when you buy a stock, you set a Stop Order.
Let's say you buy shares of a stock at $25 a share.
You've determined, by (for instance) studying the charts of that stock, that you would be willing to risk losing $2 a share in case its performance goes down.
So you buy the stock at $25 a share, and set a stop order at $23 a share.
Worse case scenerio, the price of the stock soon drops under $23 a share, and the stock automatically sells itself. You lost only $2 a share.
But, if your research on the stock is correct, the price of the shares go up.
Let's say for example the price of the shares rises to $28 a share. You've already determined if the stock goes that high, you will reset your stop order for $25 a share. That way, if the price goes down below $25, it automatically sells, and you've lost nothing.
Then, as the the price of the stock hopefully continues to rise, you can start raising that stop.
The stock that is now worth $28 a share? It will fluctuate daily, sometimes dropping, sometimes rising.
You may have decided through continuing to monitor the trend of the stock that if it rises to $30, you will reset your stop order to $27 a share.
Then, if the stock drops below $27 a share, it sells itself, and you've made $2 a share, which is an 8% gain.
You monitor the price of the stock, and has it rises, you keep raising your stop order.
I just glanced at an old spreadsheet, and I see where I once bought a stock at about $47 a share, and when it finally sold, it was at $67, or about 40%.
Of course during that same time, other stocks sold where I made less than 1%, or lost 2% to 3%, but overall over a years time I would average about 15%
You're asking if something is risky is like asking someone if riding a horse is risky or dangerous.
It is if you don't know what you're doing. But if you know how to ride, you'll most likely be fine, and have fun.