Trading Psychology | OCT 2002
Evaluate Your Risk by Simon Vine
Evaluate Your Risk by Simone Vine To accurately determine risk, you must filter classical statistical factors. How, you ask? With a personal risk profile. In classical statistics, risk is defined as the standard deviation from the mean. To some extent, this basic concept governs the minds of most decisionmakers, including investors: A decision in a given situation carries a risk equal to the deviation from the average person’s decision. Of course, it is anybody’s guess as to what the average person’s decision might be, so you cannot be certain how far away you are from the average. Thus, there is incongruence between a generally acceptable conceptual framework and the real-life behavioral aspects of decision-making. If decision-makers forget that the concept of risk is always individual in nature, their decisions become riskier and less realistic.
by Simon Vine
Technical Analysis of STOCKS & COMMODITIES
The Traders’ Magazine since 1982
has had over 1,226,237 subscribers from 174 different countries.
37,000 Page Traders’ Archive for $89.99
To continue reading, sign-up for trial access to Traders.com and the S&C Archive — 37,000 pages of trading ideas!
After verifying your email address, you will have limited access to the S&C Archive, as well as access to a Digital Edition of S&C, and access to Traders.com Advantage and Working Money for 30 days.
Not a subscriber to Technical Analysis of
STOCKS & COMMODITIES magazine?
Click
here to subscribe, or request
a trial subscription.
Log-in now to view articles from the S&C Archive.
Your Subscriber ID is located at the top of your magazine label, highlighted here in red.
Your last name can be found on the second line, highlighted here in blue.
*If you have a company name on the label, that can also be used. It will appear below your name on the label.
If you do not have a Subscriber ID on your label, you can find it on your statement or renewal form.
For help locating your Subscriber ID number, please call us at 1-800-832-4642 or send an email to Survey@Traders.com. If sending an email, please include your name and mailing address.