Risiko Management
Risiko Management
As criteria for evaluating an investment, the expected profit and control of risk are critical. Traders use different techniques to make the risk-reward ratio positive. The individual trade, for example, is limited by the use of stop rates in its risk. Good traders instead of a big bet rely on a lot of small events. The mathematical foundation behind this is the law of large numbers of the mathematician Jakob Bernoulli (1655-1705).

The law of Bernoulli states that the expected value of an event is reflected in the long run in the frequency distribution. In the short term it may be different. Even with a viable overall strategy, there can always be a long losing streak. That is a question of chance and not quality. This random effect needs a strategic response of risk management to avoid a bad series. So the single event and its outcome do not matter for a positive overall expectation. It is only important that the strategy is profitable. Therefore professional traders limit the risks and use a high trading frequency. In the best case, a steady capital appreciation works in small steps. Simultaneously, the traders actively control the risk of single trades.


MAVEST RISK MANAGEMENT
MAVEST uses a proprietary and proven approach to risk management and a consequent money management. We first define precisely how much capital should be risked in a single trade in a day at most.

The traders of MAVEST operate active money management and use a flexible position sizing.



We do not diversify via securities and asset classes. We diversify via trading events.

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