Thursday, October 14, 2010

Probability of taking chances...


Conventionally risk is expressed by the relation:
Risk = Hazards x Vulnerability.

Naturally, people take some sort of chances in their life and to gain something out of those risks. It may be acknowledged that the risks taken by the people may be calculated or the uncalculated ones depending upon their ability to withstand their decisions.

In futures trading Risk, is the probability of loss of trading capital. Market risk may be one of the things considered by fundamental traders but it is not all of it. Market risk if it exists in futures, may not be considered at all by technical traders who base their decisions on price action. Prices move first and fundamentals come second. The probability of harmful consequences, or expected losses (deaths, injuries, property, livelihoods, economic activity disrupted or environment damaged) resulting from interactions between natural or human-induced hazards and vulnerable conditions.

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