Is it possible to reduce risk to zero?

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

  1. You're right, it is imposible to make risk zero. However you can optimize your risk, ensuring that you get the best posible return for a given risk. That's the whole point of building a portfolio or using a diversity of trading strategies... not putting all your eggs in one basket.
    #21     Aug 2, 2006
  2. romik


    there is always risk as no probability factor is 100%, BUT there are ways of reducing risk, which can lead to ALMOST eliminating it. Theoretically speaking risk can not be eliminated entirely. Very much depends on the time frame used to reduce risk, the shorter the time you have to make money, generally the more the risk. That you can relate to any regular business.
    #22     Aug 2, 2006
  3. Yes. By becoming a market maker and trading against the order flow you will incurr zero risk. You will profit by at least the spread on every trade. Your stop loss is the order you have in hand which can be filled at break even at the worst case.
    #23     Aug 2, 2006
  4. range


    Yes. The "definition" of risk free is the 3-month (US) Treasury bill, now yielding over 5%. Some would argue even that is not truly risk free.
    #24     Aug 2, 2006
  5. a CD
    #25     Aug 3, 2006
  6. NO. You can't "reduce" it to 0.

    x / 0 = NULL
    #26     Aug 4, 2006
  7. reactor


    You can manage other people's money. Then your risk is zero as you still get paid even if you lose money. The catch of course is that the people who have invested in you have taken the risk.
    #27     Sep 23, 2006
  8. Zero risk does not pay very well......I'll take the higher risk proposition which pays better.
    #28     Sep 23, 2006
  9. well , maybe not to zero , but very very close to it ( as retail and non-arbitrage)
    #29     Sep 23, 2006
  10. MACD


    Yes you can...

    There are options strategies that afford small gains with zero risk.
    #30     Sep 23, 2006