Risk occurs when plans and projections don't work out as expected and you can't accurately understand and diagnose the market. market is highly volatile and unpredictable, and there are many factors that can affect currency prices, such as economic data releases, and central bank decisions.
Risk. What is it really?
- Thread starter marketpugilists
- Start date
Trading involves risk due to the unpredictable nature of the market and various factors that can affect currency prices.
But trader must be aware of these risks and employ risk management strategies to mitigate potential losses.
Adaptability and understanding market uncertainties are essential for successful trading.
But trader must be aware of these risks and employ risk management strategies to mitigate potential losses.
Adaptability and understanding market uncertainties are essential for successful trading.
That's a very interesting take. Yes, risk is everywhere. I think the best safeguard against being blindsided is to understand the nature of the environment. We didn't choose to be on earth, so a cataclysmic asteroid isn't considered risk. It's considered a hazard of being stuck here. Risk is what you face moments before willfully stepping into a new environment. And being aware of the range of potential hazards that may occur in that environment is important to properly assessing and mitigating risk.
For example, I don't have health insurance. It is intentional and it is my choice. I also don't go to hockey games because I don't have health insurance and won't financially survive a puck to the face. Many people without health insurance DO go to hockey games because either they accept the risk, or they haven't thought about the risk they're actually taking by doing so. I feel that my awareness of risk allows me to make good decisions in light of other decisions that I've made that have increased my exposure to consequences.
It's your responsibility as an individual to learn how to assess risk and be aware of a the widest range of possibilities that you could face in each situation in order to take mitigation measures. That's why it's written that Wisdom is more precious than rubies, and nothing you desire can compare with her... Proverbs 8:11 It is possible for one person to avoid catastrophe while another person falls to it and the only difference between the two was that one hadn't accumulated the wisdom to see it coming while the other had.
How much better to get wisdom than gold, to get insight rather than silver!
The beginning of wisdom is this: Get wisdom. Though it cost all you have, get understanding
Personally, I'd rather have the wisdom to avoid a puck to the face than all the money in the world to fix it. And that line of reasoning should be applied to everything you could ever face in life. At the end of the day it doesn't matter who pays for it. It only matters if you had enough wisdom and foresight to prevent it in the first place.
But lacked the wisdom to purchase insurance.)
Insurance is $400/month with a $5000 deductible. That's $4800/yr that goes into my savings account instead of going straight to the insurance co. After 20 years accident free, I was able to pay for 3 children, a broken bone and a tooth extraction and I'm still miles ahead. I take my health seriously and I educate myself on quite a few things that others would just go to the doc for. It's not for a lack of wisdom that I opted out, I promise you that. Maybe if I had a job that paid for most of it... But probably still no.
Like playing Russian roulette, most time it works but when it doesn't, game over:
https://www.elitetrader.com/et/thre...er-do-to-blow-up-his-fund-and-clients.327102/
No dist, but the comment reveals why you will never reach your potential as a trader. You seem to think that anything other than the socially approved risk management strategy is just Russian roulette. I bet you're the type of person who thinks that Stop Losses are vital to every trade, and you judge a trade to be more risky if you don't know where to set the stop.
The fact is getting diversified (as the link advised) is also Russian roulette. When there's a one out of six chance that you get the bullet, it doesn't change the game by adding more chambers. One in 500 chance is still Russian roulette. All diversification does is add more chambers and lower the reward. Instead of making $1,000 per trade now you make a dollar per trade. But instead of a 1 and 6 chance of failure now you have a 1 in 6,000 chance of failure. It looks safer but it's no different.
Your mind is set on safety and that's not wrong. Most people think this way. But outsourcing the responsibility of risk mitigation to a socially approved strategy will blind you to the cost. And when that cost changes so does the risk profile. That's why insurance really only makes sense for the middle class. The poor can't afford it and the Rich don't need it. It just feel safe because everyone says it is and very few really understands how risk works.
Thank you for your coaching sir.
I am new, only started trading options full time since 2013 and still have lots to learn.
Well, you played Russian Roulette with health insurance and won for 20 years. You can be risk averse all you want, but if 15 years ago you were the victim of an accident out of your control, you could have accrued 10s of thousands in hospital costs. There are many people who would have been financially ruined if they had not had health insurance when they needed it.
And by the way, a 1 in 6000 chance doesn't just look safer than a 1 in 6...it is, mathematically and realistically. You lost sight of the that in making your point.