Here we have a fresh new article from our guest writer John Antony! He explains all the different types of risks involved in binary options trading and make a good overview of them. Check his new binary risks article and share your opinions – which are the major risks involved and how they could be overcome!
This is very interesting and important topic! Accessing risk is very difficult and no one measure could give you the exact trading risk as it is. There are several good formulas which give some idea about the risk of our strategy like standard deviation, Sharpe ratio, VaR (value at risk), Z-score.. All of them give only a relative measure of the risk involved. There are always the so called tail risks, which are difficulty predictable by the mathematical models and are very rare but with a strong impact on the trading results, so in my opinion the best way to hedge our trading is to withdraw partially our profits from time to time. In this case even if we wipe out our account we will have a plenty of profits already booked!