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Rs Badge

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Why is stable risk (Rs element) investable?

• If you trade to manage investor capital, two risk appetites come into play

• Yours – as defined by how you manage your own capital

• Your investors – for their investment in your trading

• Investors expect risk at any time to match expected risk when they invested –

and will monitor any deviations very closely

• Deviations in risk – particularly sudden ones – will make investors lose

confidence in your risk management, and trigger capital calls

• This is the reason why stable risk matters

• The level of risk DOES NOT matter

• Ideally, risk should stay constant

• If risk changes, change should take place as slowly as possible over

time, allowing investors to re-adjust their leverage levels with respect to

you

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INDEX

1. UNDERSTANDING RS

2. IMPROVING ON RS

3. QUESTIONS?

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Rs - Risk stability – What is it?

We track worst potential loss in a strategy over time

Risk stability is the difference between max and min potential loss

A VERY IMPORTANT badge at the TS Challenge, it has an important

weight in the TS Score1

2 Stable Risk = Predictable Risk = Investable Risk (if it delivers returns :-)

3 Designed to re-assure investors that risk is managed to a PREDICTABLE level

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Rs – An example for stable risk

A Difference > 1 will penalize your Risk Stability

Risk in this specific date

Minimum risk in last month

Maximum risk in last month

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Rs – An example for unstable risk

Wouldn’t this make you nervous?

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INDEX

1. UNDERSTANDING RS

2. IMPROVING ON RS

3. QUESTIONS?

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Rs – How to improve?

Can investors trust that a strategy won’t overstep their risk appetite?

If they don’t trust, they won’t invest

Consider trade duration, market and asset volatility in leverage decisions1

2 Improvements to leverage consistency (Lc) will likely improve risk stability

3 Experiment with the effects of your leverage decisions on your risk profile

4 Use our Risk Manager for free to improve your Lc and Rs badges

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INDEX

1. UNDERSTANDING RS

2. IMPROVING ON RS

3. QUESTIONS?

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Questions?

Trading is hard – no wonder there are unanswered questions!

(Why not, together, build a Knowledge Base that answers them all?)

• The Knowledge Base contains TS Mentors’

answers to all your questions!

• Mentors are Traders like you who

enjoy helping out, and are voted

very good at it, AND

• Trading educators hand-picked for

quality and broker independence,

who pitch their materials

• Want to contribute? Great!

• Post an article / Post

• Ask or answer questions

• Rate fellow traders’ contributions

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Can you do better?

• This article is a “stub” (an unfinished entry that MUST be improved)

• We need your questions & feedback to improve it!

• Feel free to post your questions to the TS Knowledge Base

• Have suggestions?

• theowl@tradeslide.com can’t wait to hear them

• We’d love to credit you for improving our content

• Contributing to this section will boost your mentor score if others like what you post –

helping out will reflect on your community standing, which means

• More traders will visit the URL on your profile

• When they visit, they’ll request your mentoring!