Risk management
- Thread starter Goldlover
- Start date
Are there latest developments in risk management? With current tools you can get your answers faster and run scenarios faster but I don't know any risk strategies that changed much. Depending on asset, trading/investment style and holding period: correlations, bumping/shocking curves, transitions, liquidity, credit
I agree with @2rosy, he beat me with his answer. You (@Goldlover) have good intentions with your question, but I think such question will lead you in the wrong direction. Trading is not a science where you need to keep up with some latest theories.
Trading is a business in decision making, and therefore you’re the risk taker and consequently you need to know yourself intimately, how you behave under pressure, your own weaknesses and biases which might get you into trouble. This might be a psychobabble for some, but ultimately you need to become an independent thinker and learn to manage yourself and all other variables and be able to make efficient decisions under uncertainty.
Money management and position sizing strategies are just overlays which are dependent on your own personal objectives. It takes a while to develop this body of knowledge, and once you do, then you’ll realise that is there is no need to keep updated with the latest developments in risk management strategies.
Think of Jesse Livermore, he had no resources in comparison to all of us, and he was doing OK (apart from being neurotic).
This might not be the answer you’re expecting, but I really think that you to need to become independent thinker and to cease following the herd if you’re going to manage risk effectively.
Maybe you could post in this thread what risk management strategies mean to you, where you think that you might have your blind spots, how do you know what you don’t know, your worst-case contingency plan, and so on.
This little exercise that you can post here will get you started, and others might join and add few things to yours.
If you really want to gain insight into your blind spots so you can manage risk more effectively, then you can study behavioural finance.
Trading is a business in decision making, and therefore you’re the risk taker and consequently you need to know yourself intimately, how you behave under pressure, your own weaknesses and biases which might get you into trouble. This might be a psychobabble for some, but ultimately you need to become an independent thinker and learn to manage yourself and all other variables and be able to make efficient decisions under uncertainty.
Money management and position sizing strategies are just overlays which are dependent on your own personal objectives. It takes a while to develop this body of knowledge, and once you do, then you’ll realise that is there is no need to keep updated with the latest developments in risk management strategies.
Think of Jesse Livermore, he had no resources in comparison to all of us, and he was doing OK (apart from being neurotic).
This might not be the answer you’re expecting, but I really think that you to need to become independent thinker and to cease following the herd if you’re going to manage risk effectively.
Maybe you could post in this thread what risk management strategies mean to you, where you think that you might have your blind spots, how do you know what you don’t know, your worst-case contingency plan, and so on.
This little exercise that you can post here will get you started, and others might join and add few things to yours.
If you really want to gain insight into your blind spots so you can manage risk more effectively, then you can study behavioural finance.
Good Morning Goldlover,
Risk Management is overrated in my opinion.
Withdraw $X,XXX to $XXX,XXX to start trading with.
Stop trading when 50% to 100% of the amount withdrawn is lost. Find another way to make money or try again.
Stop trading when trading account is +$X,XXX,XXXX and enjoy life.
You giving out good advice
-don't read trading books
-don't take trading courses
-risk management is over rated
- just click click to get to 1mil
Good Morning hilmy83,You giving out good advice
-don't read trading books
-don't take trading courses
-risk management is over rated
- just click click to get to 1mil
This is the advice for manual/discretionary/guessing traders only.
Lol, what other advice does this type of style trader needs, who does not have a verified out-of-sample real money proven trading Edge the past +1 year?
There is 1000 trading books, plus another 1000 trading courses, can not buy them all.
Better to stare at chart and guess.
Does inadequate knowledge lead to ineffective decision-making?
a. Yes
b. No
Does inadequate knowledge lead to poor risk management?
a. Yes
b. No
Does inadequate knowledge lead to over-trading?
a. Yes
b. No
Does inadequate knowledge lead to emotional trading.
a. Yes
b. No
Does inadequate knowledge lead to a lack of understanding
market fundamentals?
a. Yes
b. No
Traders without essential knowledge deserve to lose their
money in the markets.
a. Yes
b. No
Does inadequate knowledge lead to poor risk management?
a. Yes
b. No
Does inadequate knowledge lead to over-trading?
a. Yes
b. No
Does inadequate knowledge lead to emotional trading.
a. Yes
b. No
Does inadequate knowledge lead to a lack of understanding
market fundamentals?
a. Yes
b. No
Traders without essential knowledge deserve to lose their
money in the markets.
It’s not overrated.
When people will focus on risk first,
Then it’s going to become somewhat overrated.
My risk management is simple,
Probe … Feelers
Start small & Build up
Limit max loss per day
Limit max loss per trade
Take a break after a loss
Risk percentages, not dollars.
Profitability = Edge + Money management.
If you believe this is overrated …
Good luck !
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Good Morning hilmy83,You giving out good advice
-don't read trading books
-don't take trading courses
-risk management is over rated
- just click click to get to 1mil
What other advice do you have?
There are 90,000 trading books to buy on Amazon and 646,000,000 day trading course for one person to buy and digest and learn. By time the trader is 80 years old, he/she would be done reading and learning everything on trading. And make no money and waste time.
And noone making $1million dollars a year trading is showing noone else how to make $1million dollars a year.
And no trader wants to learn how to program and back test either.
Better to stare at chart and guess and click with size.
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