How to avoid losing all your money after investing in company shares

The list of assets available for trading on the exchange contains thousands of different instruments, but most traders specialize in currencies or company stocks.

The most interesting thing is that depending on which asset a trader chooses, one can determine what type of investor he belongs to.

Typically, Forex traders prefer aggressive trading with high risk and high returns, while stock investors are less risky and want to earn a small but stable income.

People who buy company shares expect a stable income from dividends and that the investment will not require any attention.

Therefore, for many conservative investors, it comes as an unpleasant surprise to lose almost all of the money invested in securities.

Moreover, we are not talking about the exchange rate risk during margin trading , but about the likelihood of a company going bankrupt.

Why can shareholders lose everything if a company goes bankrupt?

The answer here is quite simple, because in the event of bankruptcy, obligations to shareholders are fulfilled last.

That is, if a company declares bankruptcy, then the proceeds from the sale of its assets are first used to pay creditors, taxes, and salaries, and the remaining amount is divided among shareholders.

In most cases, shareholders receive less than 10% of the price paid, which is practically nothing.

Given the current situation, such a scenario is more than obvious, so a very reasonable question arises: Should we really completely abandon the purchase of securities?

Absolutely not.

You just need to insure your risks with every transaction, even if you trade without using leverage.

When buying shares through a trading platform , it's not at all difficult to set a stop order at 3-5%, which will be triggered if the price really drops sharply.

If you do use leverage, the size of your stop loss should take into account the amount of your leverage.

In addition, it would be a good idea to monitor the news on the companies you have purchased daily and, at the first sign of trouble, decide to sell them without regretting the lost dividends.

At this time, even long-term investments require increased attention if you do not want to lose your money.