How not to lose 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 shares.
Moreover, the most interesting thing is that depending on which asset the trader has chosen, you can determine what type of investor he is.
As a rule, players trading Forex prefer aggressive trading with high risk and high profitability, while those who invest money in stocks are less risky and want to earn a little, but steadily.
People who buy shares of companies count on a stable income from receiving dividends and that the investment made will not require attention.
Moreover, we are not talking about exchange rate risk during margin trading , but about the likelihood of bankruptcy of the company.
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 itself bankrupt, then the money after the sale of its property first goes to pay creditors, pay taxes, pay wages, and the remaining amount is divided between shareholders.
In most cases, shareholders receive less than 10% of the price paid, that is, practically nothing.
Considering the current situation, such a scenario is more than obvious, so a completely reasonable question arises: Shouldn’t we completely abandon the purchase of securities?
Absolutely not.
You just need to insure your risks with every trade, even if you trade without using leverage.
When buying shares through a trading platform , it is not at all difficult to place a stop order at around 3-5%, which will work if the price really drops significantly.
If you do use leverage, then the stop loss should take into account the amount of your leverage.
In addition, it would be a good idea to monitor news on the companies you purchased on a daily basis and, at the first sign of trouble, make a decision to sell, without regretting the dividends not received.
At this time, even long-term investments require increased attention if you do not want to lose your money.