Controlling Risk by Limiting Market Exposure

risk control in a managed portfolio by reducing market exposure

A money manager can limit the amount of market risk a portfolio is exposed to by using stop loss orders on open positions. Even though our managed account program also employs stops, it adds an additional degree of risk control by reducing the amount of time a trade is open.

In order to achieve this, it doesn’t attempt to predict what prices will do in the long term, like many traditional, trend-following programs do. Instead, it looks for specific, high probability setups that only last for a relatively short period of time based on adaptive trading principles. Since these type opportunities are transient in nature, the positions remain open sometimes for as little as a few minutes, allowing the portfolio to stay uninvested during certain times. While on the sidelines, the investment is immune to the unpredictable fluctuations of the market.

How Many Trading Opportunities Exist That Meet the Risk Requirements?

Remember that the objective of the managed forex program is to control risk by limiting the time it remains invested in the market. It is not just supposed to trade for the sake of trading. The market opportunities that the program exploits do not materialize all the time. The strategy is also very selective and many conditions must be met before the trigger is pulled. Overtrading would only lead to unnecessary losses and commissions in the portfolio.

If you are interested in the unique way the program controls risk and would like to obtain more information, please click on the green button below and complete our short form. Custom portfolios can also be structured for high net worth clients that have specific investment objectives and substantial investment amounts.

Managed FX Information