Listing a company on a stock exchange can be time consuming and costly. And, once the company has gone public, it will have to consider its obligations to its shareholders, who now own a stake in the company.

Trading on a stock exchange does not ensure financial stability. Stock markets are subject to market volatility, which means that stock prices can fluctuate dramatically in response to global political and economic events.

Crashing can also occur on stock exchanges. Although they are uncommon, stock market crashes can significantly reduce the value of stocks and lead to long-term economic downturns.

By implementing a risk management strategy, traders and investors can reduce their exposure to stock market volatility.