Definition ∞ Individual investor risk refers to the potential for financial loss faced by non-professional market participants. This risk is influenced by factors such as market volatility, lack of financial literacy, and susceptibility to scams. It often relates to investment decisions made without comprehensive research or adequate diversification. Such risks can lead to significant capital depreciation.
Context ∞ In the volatile cryptocurrency markets, individual investor risk is a prominent concern frequently addressed in financial news and regulatory warnings. The speculative nature of many digital assets, combined with the prevalence of fraudulent schemes, places retail investors at a heightened disadvantage. Reports often highlight the importance of due diligence, understanding market fundamentals, and awareness of common scams to mitigate potential losses in this rapidly changing asset class.
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