Investing in the stock market can be a rewarding yet challenging endeavor. As an investor, understanding the dynamics of risk is crucial to making informed decisions and optimizing returns. Two major categories of risk in stock trading are systematic risk and unsystematic risk. This article explores both types, their characteristics, and strategies to manage them effectively.

Understanding Systematic Risk
Definition
Systematic risk, often referred to as market risk, is the inherent risk affecting the entire market or a broad segment of the financial system. It arises from factors such as economic shifts, political events, global crises, or changes in monetary policy.