What is considered the greatest risk to traders?

The greatest risk to traders is often recognized as price shocks. These can occur due to sudden and significant changes in market conditions, often triggered by unexpected news, economic data releases, geopolitical events, or shifts in market sentiment. Price shocks can lead to rapid fluctuations in asset prices, which can result in substantial losses if a trader is not positioned appropriately or cannot react quickly enough.

Traders often implement risk management strategies to cope with the potential volatility caused by price shocks. This includes setting stop-loss orders, diversifying their portfolios, and maintaining enough liquidity to navigate sudden market movements. Understanding and preparing for the risks associated with price shocks enable traders to protect their capital and maintain their trading operations over time.