- The timeframes ( IntraDay, Swing, Positional, Long Term, Short term)
- Selection of Instruments ( Stocks, Futures and Options)
- Position Size ( small or large)
- Type of strategies ( Long or Short or Pairs trading )
- Diversification ( Across stocks, industries, asset classes like commodities and currencies)
- Liquidity preferences
Thursday, July 29, 2010
Designing Risk
Financial markets allow you to design your own risk. Market is a vast pool of risk - return matrix. Investors can manufacture their own risk according to
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2 comments:
Dear Professor,
Not to forget the "vig management", i.e., one should know whether the vigorish paid will allow him to trade this or that strategy... And one should always thrive to vanquish the vig, even if it means to buy a seat at the Exchange or to join a proprietary desk at a brokerage house...
Regards from Brazil.
Namastê!
Dear Newton,
Very appropriate and timely remarks. I am a witness to the enormous effect of VIG as I daily interact with short term traders in my trading firm.
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