I'm worried

T

trader1974

Yes, I am worried because I am profitable doing swingtrading and I fear a black swan event. My worst nightmare would be a tremendous gap that would erase my account and far exceed the guarantees of my futures contracts. How do you sleep with that? Is there any formula? What percentage of your account risk? There is an extensive debate here, think that in all roulettes there is a green box. ruleta-01.jpg
 
How big is the account? You can buy and sell the indexes so that the maximum volatility (tail risk) is mitigated. It's called an index spread. They do the same thing in the interest rates market. Buy and sell rate futures of different duration to swing without wide open tail risk.
 
Buy a put option as far out the money you want to get as cheap as possible and with an exp.date when you think you will get out. It can be the cheapest way to sleep
 
trader1974 said:
Yes, I am worried because I am profitable doing swingtrading and I fear a black swan event. My worst nightmare would be a tremendous gap that would erase my account and far exceed the guarantees of my futures contracts. How do you sleep with that? Is there any formula? What percentage of your account risk? There is an extensive debate here, think that in all roulettes there is a green box.View attachment 212000
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Evaluate what kind've payoff you need. Find an instrument that is capable of paying out that amount (& possibly more), find the cost, see if you can afford it on an ongoing basis for the life of your portfolio. At the end of the day, if we want to buy a car and cannot afford the car insurance, we don't buy the car. I hope you find your way. It is mandatory. It can come from the specific structure of your portfolio (like 80% "cash" 20% full risk) or specific instruments you pay (deep options on both sides). This is oversimplified answer that should get you started in devising the most optimal strategy.
 
Amahrix said:
Evaluate what kind've payoff you need. Find an instrument that is capable of paying out that amount (& possibly more), find the cost, see if you can afford it on an ongoing basis for the life of your portfolio. At the end of the day, if we want to buy a car and cannot afford the car insurance, we don't buy the car. I hope you find your way. It is mandatory. It can come from the specific structure of your portfolio (like 80% "cash" 20% full risk) or specific instruments you pay (deep options on both sides). This is oversimplified answer that should get you started in devising the most optimal strategy.
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Adding to this, it's useful for OP to think in "units" when he trades.

Buying deep OTM options can protect against black swans. These are called units, and are useful to protect against this exact situation.
 
Can you place a daily loss limit in your platform? Hopefully it will get you out without too much slippage.

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trader1974 said:
Yes, I am worried because I am profitable doing swingtrading and I fear a black swan event. My worst nightmare would be a tremendous gap that would erase my account and far exceed the guarantees of my futures contracts. How do you sleep with that? Is there any formula? What percentage of your account risk? There is an extensive debate here, think that in all roulettes there is a green box.View attachment 212000
More...
 
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