Risk

Risk in trading is the probability that an investment will lose money.

While high-risk investments can sound intimidating for beginning investors, they can reap very high rewards for the knowledgeable and experienced trader. One of the most popular risk indicators is the beta of a stock, which measures the stock’s volatility in comparison to the rest of the market. The market beta is defined as 1.0, so high-beta stocks are riskier but have potentially higher returns, while low-beta stocks are safer but have less return potential.