1. Market risk
The value of financial instruments may fluctuate due to changes in market conditions, such as economic shifts, political events, or changes in interest rates.
2. Liquidity risk
Certain investments may not be easily sold or converted into cash without a significant loss in value, particularly during periods of market volatility.
3. Credit risk
When investing in bonds or fixed-income securities, there is a risk that the issuer may default on interest payments or the repayment of principal.
4. Currency risk
Investments denominated in foreign currencies are subject to exchange rate fluctuations, which may impact the value of your holdings.
5. Operational risk
Errors in execution, system failures, or unforeseen operational disruptions may affect your investments or access to markets.
6. Leverage risk
Trading on margin or using leveraged financial instruments can amplify both gains and losses, leading to a potential loss greater than your initial investment.