These notes are no investment advice.
You want to balance your risk appetite and investment horizon.
Specialize in one niche and research your market.
Which sectors or instruments can function as hedge against each other? What is the connection between prices of different asset classes? How are stock prices, bond prices, credit default swaps etc. linked together?
Also known as debt securities. These assets provide a fixed stream of income or a stream of income determined by a specified formula.
There are various maturities and payment provisions. Risk ranges from money market to junk bonds.
Equity gives investors ownership share in the company. It is not promising any particular payment. Return is achieved via dividend payments and share price fluctuations.
May be riskier investments than debt securities. Or at least there is less knowledge about future payoff.
Stop loss orders will let your broker sell an equity at a specified price. This allows you to limit your losses on an investment. On the other hand, you will realize your losses immediately and forfeit on the chance of prices to recover.
Sell Limit: sell at or above specified price
Derivatives provide payoffs that are derived from prices of other underlying assets such as a bond, stock price or commodity.
Can be used to hedge risks or take speculative positions.
You buy an asset and hold it either to maturity or until end of your investment horizon. Market timing is hazardous in particular for equities. If you have a long investment horizon, you can ride out market fluctuations.
Idea is that markets tend to overreact, e.g. in response to external shocks. This may lead to temporary mispricing which can be exploited. As such, it is a fairly short-term strategy. In case the markets do not correct in the short-term, you can hold the position until it has naturally recovered.
This could be achieved by giving a buy and a sell limit order. If you want to protect yourself from markets going to low, you may want to put in a stop loss order.