Is it possible to reduce risk to zero?

Discussion in 'Strategy Building' started by Norm, Jul 25, 2006.

  1. Norm

    Norm

    Hello,

    Is it possible to reduce risk to zero or nearly zero by using an entry strategy that is favorable to obtaining some profit (every an extremely small profit) and then placing a stop loss at or near the entry point?

    Norm
     
  2. If 0 risk = making money without any losing trades, then thats IMPOSSIBLE.

    But, if 0 risk = making money with a small amount of small losses, then thats POSSIBLE.
     
  3. monee

    monee

    Assuming you have a viable strategy as you increase the width of your stops generally you will increase your % of winning trades.

    Keep in mind your winners have to be large enough to compensate for your losers and obviously this depends on your stop size ,winner size, and win/loss rario.
     
  4. There is no possibility of reward without risk. If you can't handle the risk, you probably should stay away from trading...
     
  5. ddunbar

    ddunbar Guest

    Is it possible to reduce risk to zero? Of Course.

    Jump into a time machine. Go forward 5 to 7 years. Print out daily charts for S&P500, Eur/USD, Oil. (You have to print it out because too date all forms of electronic or digital media cannot survive the time warp.) Come back to present and trade away. But don't get too greedy or take on too large of a position or the future will be in flux.
     
  6. gnome

    gnome

    1. It is NOT possible to reduce the risk to zero, even for the smartest MOFO on the planet.

    2. "...Extremely small profits" are a bane to market success... you must strive for bigger wins.
     
  7. dac8555

    dac8555

    the closest youll get is straight up arbitrage. for a retail clients...this is not practical.

    but...for example.

    if a security is trading for two prices on two different exchanges at the same time, you can simultaneously buy and sell at different prices.

    but that is not risk free...you have many different kinds of risks.

    -time risk
    -market risk
    -fat finger risk (key stroke error)
    -international risk
    etc, etc, etc.

    you can eliminate some of the risk...but never all of the risk.
     
  8. Probably the most meaningful and practical thread for traders on ET! :cool:
     
  9. Reducing risk to 0 is actually quite simple.
    Go in the market and lose absolutly everything you own, + a ton of margin. {perhaps going short on oil with everything you can get, something big enough to take your broker down with you...}
    one day later you have 0 risk...

    simple eh?
     
  10. Cheese

    Cheese

    Your question suggests you are not suited to trading.

    Nevertheless, I can give you an answer near to what you want affirmed. It won't be the experience of the many but you can get risk down to a level which proves to be zero. In fact it can't be zero; it is only that by using a low bet or stake size pro rata to your capital employed for trading and by deploying an accurate methodology which utilizes the offering of the whole market day (eg YM), you allow yourself to keep building your total capital without interruption.
    :)
     
    #10     Jul 31, 2006