Risk tolerance
Risk tolerance is how much loss or price swing an investor can accept, financially and emotionally, in pursuit of higher returns.
It depends on time horizon, income, savings and temperament. A simulator is a safe way to find out how you react to losses.
Related terms
- Asset allocation: Asset allocation is how you divide a portfolio among types of investment, such as stocks, bonds and cash, based on your goals and tolerance for risk.
- Risk management: Risk management in trading is limiting how much you can lose, through position sizing, stop-losses, diversification and avoiding too much leverage.
- Paper trading: Paper trading is practising trades with pretend money, so you can learn how markets work and test strategies without risking real savings.
Guides
Practise with $10,000 in play money
Free. No real money involved.
For learning only. This isn't financial advice.