There are many different reasons people trade. Some traders may be looking to make a quick buck, while others might want to preserve their wealth in times of economic turmoil.
Whatever the reason for trading, there is always an underlying motive that drives the decision and creates a need for your service.
In this blog post, we will discuss few reasons people are trading in singapore and how you can optimize your strategies based on these motivations.
- The first one is for income. If you are a trader who is looking to make money, then this reason applies to you. In some sense, all traders trade for payment, as they want their portfolios to yield more money on average than the cost of capital (i.e., fees and expenses).
Individual trades may result in losses, but if your portfolio yields more over time, it will have been worth the activity based on pure financial theory alone. This does not include opportunity costs or other opinions on active management styles.
- The second one is risk diversification. Trading can help investors spread out risks across multiple assets so that there is less concentration in any single position or sector/region within their portfolio.
For example, someone with 100% of their portfolio invested in the stock market is more at risk if there is a high volatility period or an unexpected downturn.