What is the definition of Risk? According to Dictionary.com(link here),

Risk

noun

1. exposure to the chance of injury or loss
2. Insurance
   1. the hazard or chance of loss
   2. the degree of probability of such loss

Risk is something that exists everywhere in our daily lives. Everything that we do involves risk. However, people still proceed on with what they want to do, even with the knowledge of risks involved. Let’s take a mountain-climber for example. He is in full knowledge that by attempting to climb a mountain, risks such as falling over and losing balance may occur. Still, he chooses to continue on. Why so? Because if there’s no pain, there will be no gain. Once the mountain-climber reaches the peak of the mountain, he has succeeded. The breathtaking scenery, the fulfillment of completing an arduous journey…The list goes on. What is the morale behind this? Risks are bound to happen. It depends on each and every individual’s willingness and attitude towards managing risks. What about investment risks? Are they similar to normal risks? Well, that remains to be seen. Investing is not an easy game. The risks involved are limitless. There are several situations that may catch people off guard in investment. Freezes, droughts, floods are some examples of surprise factors that may turn the situation around. However, like what Rober Rotella says in The Elements of Successful Trading, “Trading is a business of making and losing money.”. People are bound to make and lose money in trade. So how can you go about managing such unpredictable risks? Firstly, you must understand that different people have varying perceptions. It’s integral to know your own comfort level when making an investment. Stay vigilant and aware of the risks that you’re about to take. Some are afraid of taking bigger risks, but others are willing and able to take bigger risks. This will again depend on each individual’s perception, financial ability, willingness..etc. However, one thing to note is that different amount of risks will garner different amount of rewards. The link between rewards and risks is clear-cut. The higher you risk, the potential of garnering higher rewards increases. The lesser you risk, the lower the potential. However, often enough, it is less likely that you will achieve a higher return. A piece of advice from us is that if you are not looking for a quick return, be patient and take things slow. A steady pace will provide you with better management of your investments. The downside of it, however, is that returns will probably take a much longer time for it to surface. Not many people will have the patience to wait for their investments to slowly blossom. Hence, the amount of risk taken will solely depend on how far you, as a trader, are willing to go. Before you even begin an investment, it’s best that you know what you want to achieve financially. Plan financial goals diligently, such as the time span of a particular investment, the motivation behind the investment. At the same time, be vigilant and note the rate of returns and growth, any taxes, inflations, and maintain foresight to any unpredictable risks that may occur. Many people say that investing is akin to gambling, but what sets the two apart? Proper guidelines, techniques and methods. With these elements available for investment, it’s up to you traders to make full use of it. As a trader, you need to know the most significant part of investment: Yourself. That’s about all we’ve got for you, traders. Remember: Be aware, stay constant, and know your limits. Risk can be managed if only you put in enough effort. Related sites/sources:

http://stocks.about.com/od/riskreward/a/Understandrisk.htm

http://www.rb-trading.com/begin3.html

http://www.secrets2trading.com/managing-risks-stock-trading.html

http://tradingsim.com/blog/trading-risk-summary/