In this article, We learn about "Exposure ".Let's Go!
In trading, Exposure is a general term that can mean three things:
- The total market capitalization of your opening trades.
- The total amount of risk that may exist at any given point.
- The portion of a portfolio invested in a specific market or asset.
In stock trading, your risk exposure will be equal to the total amount you spend on your open positions.
For example, if you purchased $500 of Apple stock, the total amount you could lose on the trade if Apple's stock price fell to zero would be $500.
Leveraged trading works differently.
Your exposure can significantly exceed your initial outlay (called profit).
For example, some trades require only 10% margin. This means you are at risk of exceeding 90% of the amount you deposit.
In these cases, profits can be multiplied, but losses can exceed the initial deposit.
Finally, market exposure can refer to the portion of a fund or portfolio invested in a specific industry or asset.
For example, a $100,000 portfolio with $5,000 invested in Bitcoin would have a market exposure of 5%.