Questions for Risk parameters and money management in a self adapting automated trading world

(Last Updated On: November 3, 2014)

Questions for Risk parameters and money management in a self adapting automated trading world

This is for the Meetup tonite. Sorry for last minute notice!


Risk parameters and money management in a self adapting automated trading world



This may need to be broken up into future Meetups on this topic.

Tonight’s agenda:

1. How much % allocated per position for total portfolio?

2. Who hedges out risk out of spread? On global, region, or sector view? How?

3. Who uses margin? At what exposure levels and what times ? For forex, large carp stock, or commodity, what is your sweet spot?

4. What tolerances will your broker allow (i.e. percent wise) before you are technically blown out? at 100X, a 1% will will ruin you. Sound right? What are your upper limits to protect yourself on forex, large cap, or commodity?

5. For you max exposure, how many active trading positions will you will allow to protect your trading account capital? What happens when volatility kicks in, how do you protect your portfolio? What is the max standard deviation you will allow before you are technically knocked out?

6. What is your net limit on the initial amount of your account when you initially fund it?

7. Who uses beta ratio and spread calculation on a long beta stock upper value for their hedging? Do you do the same for the short to calculate the beta of the position spread? Do you concern yourself with the beta changes as they can impact portfolio losses? Do you also apply any stop losses to help reduce the risk?

8. For bullish view, does anyone do plays like using a long defensive (eg oil)since they are more sensitive on the business cycle? How about the opposite?

9. Do you believe in a self imposed trading limit when deploying x dollars on the long vs the short? Will you keep within the position trading exposure limit if the market drops a certain % ? If that was the case, would you deploy more capital on the short side as the long side should outperform?

10. What happens if your beta ratio hits an upper level (what is the tolerance you allow?), how do you adjust both sides of the long and short? What happens if your trade becomes to capital hungry when the short exceeds your tolerance?

11. Does anyone use 2 shorts and 2 longs (or x longs vs x shorts) to help hedge out risk? Would you add an intersector trade to hedge out sector risk?

12. Overall, how do you calculate the weighting of your capital being put to work on the long and short? Who uses the beta ratio spread calculations to help with this?

13. Does anyone apply currency exchange when applying short and trader over different geographic regions? I.e. GBP vs USD? How do you hedge the currency exposure risk? Is it worth even doing?


Login details:

1. Please join my meeting, November 3, 2014 at 7:00 PM Eastern Standard Time.

2. Use your microphone and speakers (VoIP) – a headset is recommended. Or, call in using your telephone.

Dial +1 (571) 317-3112
Access Code: 764-228-733
Audio PIN: Shown after joining the meeting

Meeting ID: 764-228-733

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