Comment on Mr Consistent returning incredible returns

Madan commented on 06 Jan 2014, 03:46 PM


I have seen it being used interchangeably. But if one understands the concept well, it does not matter how it is called.

We all know Risk is the possibility of loss. The instrument we trade or the loss we incur is not the risk. The ‘possibility of loss’ is the risk. In the matter of trading futures(or stocks), and aiming for profit, risk is fundamentally unavoidable and the best we can do is to manage the risk.

Risk can be mitigated in the following ways (this is not an exhaustive list):

1. By properly managing money
2. Inclusion of diversification and instrument selection into the back-testing process.
3. Clear understanding of expectation of volatility and return (to mitigate psychological breakdown)
4. Sticking to the system.

Hope it helps 🙂

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