When making any investment it’s vital that you are fully prepared to lose all of your money. Unfortunately, investing comes with this level of risk built-in. If it didn’t, everyone would be able to do it and quit their day jobs!
Therefore it goes without saying that we don’t recommend investing money that would otherwise be used to pay your rent or pay for other important living expenses, as there is little you can do to recover your funds.
For advice on sensible investing and risk management strategies, please see the advice given on Investopedia.
Shorting is ideally something that should be practised by experienced investors. While it works to provide profits in bearish situations, losses can also be amplified when prices rise. Since there is no limit on how high prices can rise, the loss potential from shorting is unlimited. You should learn to practise risk management before trying this strategy.
Unregulated brokers and exchanges
Unlicensed platforms sound very lucrative on paper but the situation can become difficult to manage if the platform goes bankrupt as you can lose access to your funds. Unregulated entities do not ask for KYC and do not adhere to AML guidelines. We recommend that you stick to licensed and regulated companies.
If you do not practice sufficient risk management, you can spiral into mental health issues and mounting debt. Seek immediate help and counseling if experience financial or mental troubles.
Here are some resources for more help on these issues.
Money Advice Trust — Debt advice
Which? Investment Risk Guide — A guide to investment risks
Investopedia Shorting Guide — Information about shorting
Mind — A guide to seeking help for mental health issues