In trading circles we talk about risk a lot. But what exactly is it, how can we measure it, what can we do to avoid it or contain its effects, what should we do when it happens, and (hey!) can it be good as well as bad?
You will often see the phrases ‘risk management’ and ‘money management’ used interchangeably, as though they are one-and-the-same thing. But they’re not, as I will explain.