Tag: Risk Management
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Ensuring Survival: Minimum Capital Requirements to Mitigate the Risk of Ruin
Definition of Risk of Ruin It’s the probability that a trader will lose all of their capital before making a profit. This risk arises from consecutive losses that deplete the trading account. Monte Carlo Simulation for Risk Assessment Monte Carlo simulation is used to assess the Risk of Ruin. By running thousands of simulations, traders…
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Approach to Risk Management and Position Sizing
Effective risk management and precise position sizing are essential for achieving the goal. No matter how much analysis is done, it won’t suffice without these crucial elements “Your goal is not risk avoidance but risk management: to mitigate risk and have a significant degree of control over the possibility and amount of loss.” –Mark Minervini…