How to manage investment risk
Investing comes with its own set of risks. Here's a practical guide to risk management tips, tools and techniques when buying and selling shares and ETFs.
How can I manage my risk when investing?
Spread your investments
Diversify across different companies, sectors and regions to reduce concentration risk
Set limit orders
Execute trades at your preferred price levels rather than accepting current market prices
Use our online learning portal
Become better at managing investment risk with free educational materials, like IG Academy
Stay informed with market insights
Get access to analyst research, company reports and market news to make informed investing decisions
Track your portfolio performance
Monitor your holdings, gains and losses on our IG Markets app
What is meant by “risk” in investing?
There are risks involved when investing. That’s because all investment activities carry a certain level of uncertainty, and this is something you must give careful consideration prior to committing capital. These are some of the risks you should consider carefully and how you could manage them:
| The risk | Why it happens | Ways we help |
| Market risk | The entire market can be affected by economic conditions, interest rates or geopolitical events, causing widespread price movements that impact your holdings | Access to research, news and analysis to help you understand market conditions and make informed decisions |
| Company-specific risk | Individual companies face unique challenges - poor management decisions, competitive pressures or industry disruption - that can negatively impact their share price and your investment | Real-time news feeds, analyst research and company reports to keep you informed about developments affecting your holdings |
| Price volatility | Share prices can move sharply and unpredictably, sometimes making it difficult to buy or sell at the price you expect | Use limit orders to set your preferred buy or sell prices, giving you more control over execution even in volatile markets |
| Concentration risk | Putting too much capital into one company or sector means your entire portfolio could suffer if that area performs poorly | Access to thousands of shares and ETFs across global markets to help you diversify if you choose to |
| Liquidity risk | Some shares trade infrequently, making it difficult to buy or sell quickly without affecting the price | Access to major global markets with high trading volumes, plus research tools to help you understand liquidity before investing |
| Currency risk | When you invest in foreign shares, currency movements can impact your returns - even if the share price rises in its local currency, you might lose money if that currency weakens against the Singapore dollar | Access to shares across multiple currencies and regions, allowing you to spread currency exposure if this aligns with your investment approach |
Protect yourself with these risk management strategies
All investing involves risk and share prices can fall as well as rise. Here's how to manage these risks effectively.
Portfolio diversification
Spread your investments across different companies, sectors and regions to reduce concentration risk. IG Markets gives you access to thousands of shares and ETFs across global markets, enabling you to diversify your portfolio if you choose to.
Position sizing
Don't invest more than you can afford to lose in any single share or sector. By limiting how much capital you allocate to individual positions, you could help protect your overall portfolio from significant losses if one investment performs poorly.
Stop losses
Set predetermined exit points to limit potential losses on individual positions. Stop-loss orders automatically trigger a sale when a share reaches your specified price, helping you manage risk without constantly monitoring the market.
Gradual market entry
If you're new to investing, you might prefer to start with smaller amounts while you learn how markets work. IG Markets supports this approach with fractional shares (available for US markets) from just S$1, making it accessible if you want to begin with smaller investments.
Regular monitoring
You can regularly review your holdings to track performance and ensure your portfolio remains aligned with your personal goals and risk tolerance.
Education
Continue learning about investing through resources like our learning hub and IG Academy to improve your decision-making skills.
We help you to plan and manage your investing decisions
Before you start investing, it's important to understand financial markets and different investment approaches. Our educational materials are here to help you grow as an investor and manage your risks effectively.
Join IG Academy
Explore a range of free beginner, intermediate and expert courses
Get analyst insights
Read articles on investment strategy, market analysis and company research
Watch free webinars
Watch live or pre-recorded webinars hosted by our experts
FAQs
How do you manage risk when investing?
Risk management involves several approaches including diversifying across different companies and markets, setting clear entry and exit points and regularly monitoring your portfolio. Education also plays an important role - understanding markets and investment approaches could help you make informed decisions.
How often should you review your investment portfolio?
Portfolio review frequency depends on your personal circumstances and goals. Long-term investors might review quarterly or semi-annually, while others prefer monthly check-ins. Regular monitoring helps ensure your investments remain aligned with your risk tolerance and objectives.
What is diversification in investing?
Diversification means spreading your investments across different companies, sectors and geographic regions to reduce risk. Instead of putting all your capital into one or two shares, you hold a range of investments so that poor performance in one area doesn't significantly impact your entire portfolio.
What's the difference between investing and trading?
Investing typically involves buying shares with the intention of holding them for the long term, focusing on company fundamentals and growth potential. Trading usually involves more frequent buying and selling to profit from short-term price movements, often using leveraged products like CFDs.
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Disclaimers:
- All forms of investments carry risks, including the potential loss of all or part of your principal amount invested. The value of an investment product may rise or fall, and may also become valueless. Past performance is not indicative of future results. Please ensure that you fully understand, and are aware of, the risks and costs involved.
- Trading CFDs may not be suitable for everyone. CFDs are leveraged instruments and can result in losses that exceed deposits. Refer to the Risk Disclosure Statement and Risk Fact sheet.
- IG Asia Pte Ltd (Co. Reg. No. 200510021K)("IG") is regulated by the Monetary Authority of Singapore and holds a capital markets services licence.
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