Risk Management in Trading, Kenneth L. Grant
Most traders mistakenly believe that the main task of an investor is to maximize earnings.
But in fact, the main task in trading is to reduce possible risks, since it is the minimization of losses that allows you to get a stable profit.
The book was written by a true professional in this matter, Kenneth L. Grant is a leading risk manager in one of the investment companies.
Thanks to this, you will learn not only the theoretical aspects of this issue, but also get an idea of their application in practice.
Summary of the book:
1. Investments in risk management - why risk management activities should be perceived as investments, calculating the size of risk and creating insurance capital.
3. The structure of profits and losses over time - the concept of a unit of time on the basis of which the analysis is carried out and the degree of their influence on the current price.
4. Risk components of an individual portfolio - we evaluate how reliable our portfolio is by analyzing its individual components. Examples of calculation methods.
5. How to choose risk exposure levels (First Rule) – Sharpe ratio, volatility management, drawdown and liability compensation.
6. Regulation of portfolio risks (Second rule) – calculation of the size of each position, selection of the economic sector for investment, diversification of investments.
7. Risk components of an individual transaction - planning an individual transaction taking into account the asset, time, commission, order type and other important parameters. As well as managing an already open position.
8. Main conclusions - it contains everything that you read in the previous chapters; for those who do not like to read a lot, you can limit yourself to reading this chapter :)
The book is well worth attention and will be of interest to almost any investor, and practical examples will make its contents more accessible.
Download Risk Management in Trading, Kenneth L. Grant