Prajna Capital - An Investment Guide

Margin trading increases your buying power, but it enlarges your risk as well. When to give in to the temptation of this high-risk trading strategy, and when to avoid Double gain; Double pain. This is how the concept of margin trading can best be described. As the name suggests, margin trading enables you to trade with borrowed funds/ securities or, in other words, by paying only a part of the total investment amount. It is, in fact, a leveraging mechanism which enables you to take exposure in the stock market over and above what is possible with your own resources. However, while margin trading increases your buying power, it enlarges your risk as well. In a way, amplifying your gains and losses to the same degree. That is why it is still not a recommended way of trading, although the lure of big money has always drawn investors into the lap of margin trading. So much so that an increasing number of small investors are now giving in to the temptation of this high-risk trading...

This article outlines different degrees of risk tolerance investors have, and suitable investment options Investors often hear of the maxim, 'greater the risk, greater the reward' . Risk tolerance is the level of comfort with which a person takes risk. What exactly is this risk and how does it effect an investor's decision? Risk appetite can be defined as the willingness of an investor to bear risk. Investors despise uncertainty. Risk appetite, risk aversion and risk premium is often used in place of the other. However, there are some finer nuances that distinguish one from the other. A) Risk appetite - Some people take higher risks . In other words, they are willing to lose more until they get the expected returns. A person who can stand all his money getting eroded has a greater risk appetite. B) Risk-averse - Reluctance to accept. Risk-averse persons exhibit reluctance to accept a bargain with an uncertain payoff. He would instead be content with a deal that is...