Risk Management

Comprehensive guide to managing trading risks and protecting your portfolio.

Understanding Risk

Types of Risk

• Market Risk: Price movements against your position
• Liquidity Risk: Inability to exit positions
• Systemic Risk: Market-wide events
• Operational Risk: Platform or execution failures

Measuring Risk

• Standard Deviation
• Value at Risk (VaR)
• Maximum Drawdown
• Beta

Risk Management Framework

Pre-Trade Risk Assessment

Before entering any trade, assess:

1. Maximum loss scenario
2. Position correlation with portfolio
3. Event risk (earnings, news, etc.)
4. Liquidity conditions

During Trade Management

• Monitor position performance
• Adjust stops if needed
• Scale out of profitable trades
• Cut losses quickly

Post-Trade Analysis

• Review what worked
• Identify mistakes
• Update risk parameters
• Document lessons learned

Portfolio Risk

Correlation

Avoid highly correlated positions that move together.

Sector Exposure

Limit exposure to any single sector or asset class.

Maximum Portfolio Risk

Total portfolio risk should not exceed 6-10% at any time.

AI Risk Management

Neura AI helps manage risk by:

• Calculating optimal position sizes
• Identifying high-risk market conditions
• Suggesting stop loss levels
• Alerting to unusual market activity

Emergency Procedures

Market Crash Protocol

1. Reduce position sizes
2. Tighten stop losses
3. Increase cash allocation
4. Avoid new positions

Flash Crash Response

• Don't panic sell
• Wait for liquidity to return
• Review orders for execution errors