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On Making Risk Less Risky

Feb 5, 2008
Bearing in mind, that risk itself is similar to taking a journey towards a target you are not sure to reach safely, it is fair to assume that the less knowledge we have about a particular thing we wish to engage in, the greater the uncertainty we will face.

To get the odds in our favour to reach our goal successfully, we need to study the following four points first.

1.What could be a possible cause of derailment of our proposed investment.

2.What are the things that could stand in the way of reaching a successful outcome.

3.What are the valid arguments for, and against, the probability of success or failure.

4.What is the extent of our awareness of the risk we are taking, or are we making a decision under partial ignorance.

Applying these tests before making a decision is important. Since it not easy to know the answers to all the questions, many people do not bother and tend to be guided by their intuition.

To play the forex market by intuition, to back horses by intuition, to play in casinos by intuition, all this of course, is a formula for disaster.

If the more information we have about what we need to know provides a greater chance of success, then we must make it our business to get it. Knowledge and information are the odds you need in your favour. Whatever the investment, it is not prudent to make a decision under ignorance. If you cannot accumulate enough information about the investment you want to make, stay away from that deal and wait for another.

Of course, there are different types of investments, and therefore information and knowledge has to be pertinent to the particular investment.

If we are talking about horses racing, we would need to know about the state of the going, meaning does the horse like soft ground, or hard ground, does it run better on a left hand turn track or a right hand turn track, what distance is it best at, what draw has it got, who is the jockey, what opposition is it running against etc.

When we are talking about a football game, there are equally a series of questions that have to be answered. Are all the star players in the team, are they playing at home,against whom are they playing, and so forth.

Playing the markets is a game based on a great deal of skill, but sometimes there are certain conditions which demand extreme caution, because any amount of skill can be derailed by events not always available for consideration in good time.

Currency markets are vulnerable to a large number of factors which must be taken into account, especially when volatile conditions are present.

One can either study the particular field, or be guided by experts and consultants who like some doctors, can be good, or extra good, but it is still better to take their advice than to do it alone. Of course if you only have a small cold, there is probably no need for a doctor. In the case of a major illness, you turn to the doctor. By the same ruling, if you invest very small money, you tend to use your own brains, but when playing in hundreds of thousands, it is prudent to seek the best help one can get, or certainly gather a great deal of knowledge and information before making a move.

By careful process in gathering as many odds in your favour before firing, you will find that things will turn out more profitable, and certainly less risky.

Precaution is an enemy of risk. Everybody knows that it is wise to take precaution, but not all take it. The few that do all they can, are wealthier and healthier, than the many who tend not to bother.
About the Author
Paul Dubsky is director of Foreign Currency Exchange Services Ltd. The company is focused on being able to offer really friendly currency exchange rates and international money transfers. We believe we are the only Foreign Currency Exchange company which offers special rates to Senior Citizens.
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