Do you know your Risk of Ruin in trading ?

As traders one of the most important but neglected topic is  Risk Management. If you want to become a consistent profitable trader risk management needs to be mastered upon.  It is what keeps us in the game as traders.
During my interaction with traders I am often surprised to find that many traders have no idea of what their Risks are. This involves Risk per trade, per day, per week/month and overall Risk of Ruin. Most traders are aware of Risk per trade or per day, however very few are familiar with Risk of Ruin.

What is Risk of Ruin?

Risk of ruin is a concept in gambling, insurance, and finance relating to the likelihood of losing all one's capital or impacting one's bankroll to the point that it cannot be recovered. For instance, if someone bets all their money on a simple coin toss, the risk of ruin is 50%. In a multiple-bet scenario, risk of ruin correlates with the number of bets, in which risk increases the longer one plays.
In Trading it refers to the amount of

Continue Reading