There is an increased chance of losing money when trading in high-risk markets, including commodities and cryptocurrencies. This is because these markets are highly liquid and volatile, and are affected by a number of internal and external factors, including economic indicators. Other derivative products, such as futures, forwards and options, are also a risky investment, along with certain types of stocks and exchange-traded fund investments.
Certain trading strategies are also considered high risk in comparison with others. Short-term strategies such as scalping and day trading aim to make small but frequent profits from price fluctuations in volatile markets, by entering and exiting the position as quick as possible. These strategies can pay off if successful but there is an equal risk of losing a large amount of money.