Is it possible to insure your investments in the forex or stock market?

If you live in Europe or America, you quickly realize that almost everything is insured here, from real estate to financial risks and personal liability.

A reasonable question arises: is it possible to insure yourself against losses resulting from stock trading or investments?

In this case, investments will receive the maximum degree of protection, and there is no need to fear losses if the price changes for the worse.

Indeed, this type of insurance exists, and if you wish, you can insure your investments, albeit with a lot of reservations and restrictions.

When investments cannot be insured

When using margin trading —that is, when you use leverage when opening trades. With this type of trading, the risks increase proportionally to the amount of leverage, and no one will insure such transactions.

When trading on the foreign exchange market , insurance companies almost never insure transactions on the foreign exchange market. This means that if you trade on forex, you can forget about insurance.

If your broker does not meet the requirements set by the insurance company and does not have all the necessary licenses to operate.

What can be insured?

Broker bankruptcy or default is one of the main types of insurance readily offered by insurers. In this case, you'll receive a payout if your broker goes bankrupt and fails to fulfill its obligations.

It should be noted, however, that brokers themselves often insure their clients' funds, and do so completely free of charge. For example, at the same brokerage company, Amarkets, client accounts are already insured by The Financial Commission for the amount of 20,000 euros.

Fixed loss amount - if the price of the shares you purchased falls, you receive a compensation amount of a certain amount.

For example, if your losses are insured for $1,000 and you lose $1,500, the payout will only be $1,000. If the amount of loss is less than the insured amount, only the amount of loss will be paid.

This type of insurance comes with a number of caveats, but you can still find a company that will insure your securities investments against adverse market fluctuations.

Because it is quite difficult to obtain full insurance against losses, most traders prefer to resort to other methods of risk insurance.

Individual investors prefer to diversify their investments , while large investment companies always hedge their positions .