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Why retail traders are more at risk of losses in current market environment

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There is a looming fear of recession across Europe. The ongoing war in Ukraine has caused food and energy shortages which have contributed to inflation that has led to interest rate hikes in major economies.  According to the European Central Bank (ECB), the harmonised consumer price index across Europe, also known as inflation sits at 8.6 per cent and this is undesirable as the ECB’s target is two per cent. This high inflation has had a toll on the Euro currency as the EUR/USD exchange rate has fallen below $1. In June 2022, major indices like the S&P500 crossed the bear market line of 20 per cent after falling 23.73 per cent from its previous 52 weeks high, FTSE 100 has also fallen 5.6 per cent from between January and June 2022 As inflation bites harder and S&P500 and FTSE underperform, volatility indicators like the VIX is at 27.22 indicating higher than normal volatility.  Although volatility presents retail traders the opportunity to make profits since there is a sharp rise and fall in the price of securities, it also exposes them to risks of loss.  The fate of retail traders looks gloomy when we consider that many traders are inexperienced. A good number of them are...


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