RISK MITIGATING STRATEGIES OF RETAIL INVESTORS IN THE STOCK MARKET

Abstract

For the successful navigation of the stock market's complexity, especially for ordinary investors, smart risk management measures are required. The stock market offers both attractive opportunities and inherent risks. The purpose of this study is to investigate and evaluate the risk management techniques used by individual stock market investors. This study aims to provide insight on the efficacy and influence of these strategies on overall portfolio performance by analyzing the various methods used by retail investors. An in-depth examination of the academic literature, business reports, and empirical data has been done for this study. Well-structured surveys and interviews are used to collect primary data in order to get information directly from retail investors. To capture the variety of risk, the research includes a wide range of retail investors, including beginners, seasoned investors, and traders. Diverse risk management tactics have been reviewed, including diversification, stop-loss orders, asset allocation, hedging measures, and market timing. The study also examines retail investors decisions and their risk-taking capacity, as these are also important parameters to be considered before investing in a stock market. The findings of this work will clarify the prevalence and effectiveness of various risk management techniques used by retail investors in the stock market. The study will also identify frequent errors and difficulties faced by retail investors while managing risks. In the end, this study aims to add to the body of knowledge on stock market risk management techniques while also acting as a tool for retail investors to use when making decisions that are in line with their risk appetite and financial objectives. Investors can create effective risk management plans to minimize potential losses and maximize their investment returns in the dynamic and constantly shifting stock market environment by recognizing the advantages and disadvantages of various approaches.