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Identifying and managing the relationship between risk vs control of an outcome.
Risk management is a concept in investing that's focused on managing losses and profits, creating a risk/reward ratio. This ratio helps prevent traders from losing all their money. All traders must understand and apply risk management whenever dealing with any trade regardless of the type of market.
It's important to plan every trade with a risk management strategy because it will reduce trade execution time and lead to more consistent profit. At ScaleTrade we offer our users several options for using risk management.
At ScaleTrade we value working towards giving our users the highest amount of profitable trades with the lowest possible risk. Therefore, we don't offer stop losses or take profits, as the most optimal parameters vary based on market trends, securities, and even the trading style of the individual investor. On the other hand, we found that offering users signals on when to Liquidate On Close on close helps with avoiding overnight liquidity. In order to support users in achieving consistent returns, we also incorporate portfolio allocation equally across securities to reduce risk and our algorithm is market neutral which means we make money with our trades when the market is up and down.
Risk management should be practiced and understood before making any trades. Some best practices with risk management in trading include: stop losses, take profits, and liquidating positions on market close. At ScaleTrade we believe that part of our success in the market is due to applying risk management techniques in every trade.