What Are the Risks of Buying Stocks?
The main risk of buying stocks is that the share price can fall, so you may sell for less than you paid and lose part, or in the worst case all, of the money you invested. Prices move with the company's results, investor sentiment, interest rates and the wider economy, and nothing guarantees that a fallen price recovers. Other risks come with this: a stock can be hard to sell when few people are trading it, the exchange can suspend trading in a stock, a company can cut or stop its dividend, and a company in serious trouble can be delisted. On Pluang, Indonesian stocks are bought with your own cash and there is no margin trading, so you cannot lose more than the amount you invested. Your shares are recorded in your own name at KSEI, but no protection scheme covers losses caused by falling prices.
The main risks of buying stocks
| Risk | What it means |
|---|---|
| Price risk | The share price falls below what you paid. This is the risk every stock carries. |
| Liquidity risk | Few buyers or sellers are trading a stock, so you may not be able to sell quickly or at the price you want. |
| Daily price limit | IDX rejects orders priced below a stock's lower limit for the day (Auto Rejection Bawah, ARB), which for most stocks is 15% below its reference price. In a heavy sell-off a stock can sit at that limit with more sellers than buyers, so a sell order may not fill that day. |
| Trading suspension | IDX can halt trading in a stock, for example after unusual price movements. You cannot buy or sell it until trading resumes. |
| Delisting | A stock can be removed from the exchange. After that it no longer trades on IDX and becomes very hard to sell. |
| Dividend risk | Dividends are decided by each company and are not guaranteed. A company can reduce or stop them. |
| Dilution | When a company issues new shares, for example in a rights issue, your share of the company shrinks if you do not take up your rights. |
Ways to manage these risks
- Invest money you will not need in the short term, so you are not forced to sell during a fall.
- Spread your money across several companies and sectors instead of one stock.
- Check a company's fundamentals and trading volume before you buy.
- Use Limit orders to control your price. When you place a Limit buy order, you can also set a Stop Loss (SLTP in the app), which places a sell order at the price you choose. It cannot be added later, and in a fast fall the sell order may not fill.
Risks that Pluang's structure limits
- No margin trading and no short selling for Indonesian stocks, so the most you can lose is what you paid.
- Shares are recorded in your own name at KSEI, and trades are cleared and guaranteed by KPEI.
- Cash in your RDN at Bank Jago or BCA is protected by LPS up to Rp2,000,000,000 per customer per bank.
- No protection scheme, including SIPF, covers losses from falling prices.
Related questions:
Q: Can I lose more than I invested in Indonesian stocks on Pluang?
No. Pluang has no margin trading and no short selling for Indonesian stocks, so every purchase is paid in full from the cash in your RDN and you can only sell shares you already hold. The most you can lose on a stock is the amount you paid for it, which happens only if its value falls to zero or it can no longer be sold. Leveraged products work differently, because borrowed money makes losses grow faster.
Q: Are stocks riskier than mutual funds or deposits?
As a rule, a single stock carries more risk than a mutual fund, and both carry more risk than a bank deposit. A deposit pays a set interest rate and is protected by LPS up to its limit. A mutual fund spreads its money across many securities, although its value can still fall. A single stock depends on one company, so its price can swing much further, in both directions. Higher risk can come with higher potential returns, but there is no guarantee.
Q: Why can't I sell a stock that is falling sharply?
When a stock falls to IDX's lower limit for the day, known as ARB (Auto Rejection Bawah), the exchange rejects any order priced below that limit. If there are more sellers than buyers at the limit, your sell order waits in the queue and may not fill that day. Trading in the stock can also be suspended by IDX. Both are exchange-wide rules set by IDX, not Pluang settings, and they apply in every Indonesian stock app.