Risk Management Notes

We've just published a new T2W article called "Risk Management Notes" by Fernando Gonzalez.

Quick Summary: Risk management isn't just about adhering to 'stop losses', so what else is it?

PS. Don't forget to rate the article after you've read it and share your comments on this thread.

the author is taken his thesis for real.
He didn't prove his thesis. No examples were given.
"A good thesis statement makes the difference between a thoughtful research project
and a simple retelling of facts"
The game of investments goes far deeper.
Andree Kostolany thesis goes far deeper and has been proved :
There is undeniable proof that a long term investment runs into profit.
"The proof of the pudding is in the eating"

P.S. :
# SIZE: The more we expose our account,
the "larger" the exposure.
# FREQUENCY:The more frequently we trade,
the more we are exposed to the markets' motions over time, the more risk we assume. Also, commission costs become a factor that significantly affects risk levels as we increase frequency.
# DURATION: The longer we are in each trade,
the more opportunity the market has to travel, the higher our risks will be.

Imho, the main problem concerning risk management for many (not only new!) traders is, that they aren' t able to calculate a sufficient account size in dependence of their selected trading concepts or systems.

Risk is even under-estimated under known current market conditions, but specially under possibly changed market conditions in future.

There are methods out (not to solve all problems, but) to help in this context (monte carlo simulation, data scrambing etc.), but there's some experience and knowledge necessary to see the big picture...

bye,
zentrader

Fluff. Maybe title should be "If you have never dealt with Rish Management before"

I can only assume (as it is not made clear) is that what the author means by "building a buffer" is that in order to increase any risk one first needs to increase the amount of capital, presumably by sensible trading, before increasing the amount of risk being carried. Can there be any other kind of buffer?

I assume that R is a dynamic amount, based on your account size (assuming only 1 trading account without reserves elsewhere) and not some constant based on your initial capital. This would automatically adjust as the account size (capital) changes. No?

The three settings can be fiddled with but ultimately R stays R and should guide your exit on losing trades.

Have I missed the boat here completely?