Never before in history have the financial markets been so easily accessible to the individual investor and never before has the market been so energized. With the recent surge of the markets and of novice investors entering the market, the rewards of the past decade often overshadow the risks. It is important that all investors be reminded that the current market environment is volatile and risky. In an effort to help our clients reap the rewards of the market while still understanding the risks, we have compiled the following list of guidelines to assist you in protecting your portfolio.
Many active traders lose money.
Active trading is not suggested for retirement accounts or income generating accounts. Trade with your head not above it. However, in a rapidly volatile market, sharp price declines can also exaggerate your risk of loss. When customers trade with borrowed funds, they can lose more than they initially invested. A decline in the value of the securities that are purchased may require additional funds be paid to the firm to avoid the forced sale of those securities or other securities in an investor's account.