What skills are needed to effectively manage risk? Risk analysis and management

25.09.2019

To begin implementing risk-based thinking in an organization, you need to:

Select international standard By risk management for implementation.
Prepare a risk-based analysis of key strategic objectives.
Decomposition of strategic goals.
Identification of uncertainties and risks.
Conduct a risk-based assessment of strategic objectives.
Update your strategy based on risk.

2. Set the tone from the top

In order to set the right tone at the management level, a risk manager can heed the following tips:

Develop high-level policies for risk management.
Document the appetite for different types of risks in existing regulatory documents.
Include risk discussions on the board's agenda.
Recommend the creation of a separate risk management committee at board level or expand the mandate of the existing governance body.
Promote the development of risk management both internally and externally.
Create a “no-blame” atmosphere.
Find common language with managers responsible for related management systems.
Identify customers/proponents for implementing risk-based management.

3. Establish risk management roles and responsibilities

Clear distribution and consolidation of roles and responsibilities for risk management important for creating a strong risk management culture within the organization. We have prepared the following five recommendations to help make risk management the responsibility of every employee:

Select a risk management model that is appropriate for your organization's current maturity level.
Document risk management roles and responsibilities in existing job descriptions, departmental regulations, and committees.
Update existing policies and procedures to address risk.
Conduct frequent risk culture assessments.
Incorporate monitoring of risk management responsibilities into your annual staff appraisal process.

4. Keep it simple

This golden rule risk management: the simpler, the more transparent and understandable! As a risk manager, your goal is to help the organization become more risk-aware. Risk management initiatives should be understandable to everyone and easily integrated into normal business activities; otherwise, you will likely face a lot of resistance or be ignored by management, which is much worse.

Speak the language of business, do not use professional risk management terminology when communicating with business. Using the terms VaR, EaR, CFaR may be absolutely acceptable when communicating with the CFO, but the production director will very quickly lose interest in you.

5. Help employees consider risks in their work.

I remember a friend here catchphrase: “If the mountain does not come to Mohammed, then Mohammed goes to the mountain.” It's time for risk managers to stop creating their own parallel universe, constantly demanding from business information, participation, risk assessment, and special measures to manage these very risks. All this does not fit into the consciousness of business, which lives in a completely different logic, and the strangest thing is that it completely contradicts the basic principles of GOST R ISO 31000:2010. Help businesses consider risks in their work not just once a quarter, but every day.

6. Risk-based strategic planning, budgeting and performance assessment

Risk management plays an important role in business planning. Analyzing the impact of risks on the company’s goals helps managers significantly expand their horizons, and most importantly, reduce negative influence mental traps for acceptance management decisions. Risk management helps a company clearly identify and accept the risks associated with the strategy that the company is willing to take on, those risks that the company must cope with at all costs. Often, risk analysis can lead to a complete change in strategy if unacceptable risks cannot be managed or are beyond control.

In practice, the integration of risk management elements into business planning can be carried out as follows:

documentation of appetite for different types of risks in existing regulations at the management or board level;
identifying the main risks and assessing their impact on the company’s strategic plans and budgets;
the use of simulation modeling to determine the target parameters of a strategy or business plan, taking into account risks;
application of simulation modeling (scenario analysis) to determine the target parameters of the company’s budget taking into account risks and establishing risk-oriented KPIs;
integration of risk analysis into management, investment, design and other material business decisions;
assessment of the company's performance taking into account risks.

Effective risk management provides increased confidence in what we can achieve desired results, reduce risks and threats to an acceptable level, and make informed, risk-informed decisions. Some examples of integrating risk management into key components of planning and decision-making are presented in this section.

7. Create a network of “risk champions” throughout the company

Another useful technique now being adopted by companies with a mature risk management culture is the creation of a network of “risk champions.” They are the glue between the risk management team and the business unit employees. “Risk Champions” help implement risk management elements into key business processes and regulations within the organization. Typically, risk champions are people who are naturally motivated to manage risk effectively. Employees responsible for project management or the development of methodology in different departments are well suited to the role of “risk champions”.

8. Provide risk management training

Risk management While hardly a short-term initiative, introducing risk management elements into decision-making processes requires long and painstaking work. One of the key components of the development of risk-based management is employee training and the development of a risk management culture.

In this section, we have grouped together the main recommendations that will help strengthen the risk management culture in your company:

Incorporate risk-based decision-making competencies into training for new employees.
Provide training to executives and the board of directors.
Identify and train risk champions.
Make training competency-based.
Provide annual internal certification for employees working in high-risk areas.
Also use passive learning methods.

9. Be directly involved in risk assessment of projects or strategic initiatives

It is important not just to apply risk analysis when assessing key project indicators and making management decisions, but to participate directly in this. If such an opportunity arises, risk managers may take personal responsibility for conducting such analysis and for its results.

The analysis of key project indicators taking into account risks should be comprehensive, and the results should be easy to read and understand by top managers who are not specialists in the field of risk management. The impact of uncertainty and risk on the timing, cost or quality of the project should be analyzed as transparently as possible and, where possible, with reference to industry data, historical facts or reliable internal and external forecasts.

10. Promote open discussion of risks

Some tips to help risk managers establish a dialogue about risks:

Speak the language of business.
Include risk information in the company's external communication channels.
Establish an exchange of information about key risks within the organization.
Create simple mechanisms for risk escalation.

11. Remember to regularly test assumptions made by management.

Risk managers play an important role in the decision-making process by studying the external environment and analyzing potential risk factors that may not be obvious to management. IN recent years, companies around the world are becoming increasingly interdependent, which brings benefits in efficiency and innovation, but also increases companies' exposure to risks—in many cases, risks they are not even aware of.

Risk managers must look beyond known current issues to observe factors external environment, analyze interdependencies and correlations, study trends and pay attention to “red flags”.

12. Inform management about upcoming threats

One of the most important skills any risk manager must have is the ability to communicate to management about emerging risks on the horizon. This means having processes in place to scan internal and external environment to identify emerging risks, format information properly and timely present it to the company’s management. Risk managers must be able to interpret signals from the market, competitors and government agencies, internal personnel risks and changes in work and production practices to identify risks. All this is possible only if the risk manager is directly involved in making strategic business decisions together with other company managers. Regular communication with the heads of relevant departments allows risk managers to identify impending threats and become a true expert in the business for which they work.

13. Conduct risk analysis when requested by management.

Sometimes management may involve a risk manager to analyze the risks of a specific business plan or decision. For example, management may believe that the negative impact of currency fluctuations on the company is growing too quickly, and asks you to analyze the scale of the threat and, together with the financial department, determine possible solutions.

Requests like these are always a good thing and highlight that risk management skills are in demand among management. If you receive such requests, develop a methodology for completing it that is consistent with the materiality of the threat, the deadlines set, and the availability of information for analysis. Where possible, use modern instruments quantitative risk analysis, such as Palisade Decision Tools or SAS solutions. Use analytical sources to model the impact of risks on decisions, such as Bloomberg and other industry databases.

14. Build a network of risk managers from your company and related industries

If possible, learn from others by establishing connections with risk managers from similar companies. You will invariably meet other risk managers, on professional online forums, and by attending various risk management conferences. Stay in touch with them, learn from each other, and exchange experiences.

15. Constantly improve your own risk management skills

Risk management is a very dynamic discipline and you need to stay up to date with current events. Constantly polishing your own risk management skills means learning new techniques quantification and risk management and, equally important, examining data about the business as a whole. The days of methodology gurus who do not understand the nuances of business and human psychology are over.

Senior management today expects risk managers to be directly involved in the decision-making process, sharing some responsibility for the outcome of decisions made. As a result, risk managers must understand the specifics of the business and industry in which they work, no less than the peculiarities of risk simulation modeling and the psychology of risk perception. This means that attending conferences related to your industry is just as important as participating in events and communities for risk managers. It is critical that risk managers understand industry-wide issues and challenges.

So let's quickly summarize some key points. Risk management– these are not only tools and equipment, but also changes in the culture and thinking of employees. To strengthen a risk management culture, risk managers can start by embedding elements of risk analysis into key business decision-making processes, helping to set the tone for senior management and defining roles and responsibilities for managing those risks. Start small but important, gradually expanding the scope of risk management. However, it must be remembered that overcomplicating procedures and techniques may be more detrimental to risk management culture than beneficial.

It is extremely important to avoid positioning risk management as a separate and independent activity, the so-called risk management system. Risk managers must first integrate risk management into the business. This can be achieved by integrating elements of risk analysis into decision-making processes, assisting management in assessing projects and strategic initiatives using risk analysis tools, integrating into strategic planning, budgeting and performance management, by including risk management responsibilities in job descriptions, management training and so on.

Risk managers should strive to become sought-after advisors to senior management and the board of directors. Advisors who are trusted and whose recommendations are listened to. Some examples include regularly assessing risks on the horizon, critically testing management's risk-based assumptions in business planning, and providing independent risk expertise when discussing business decisions.

To learn, you need to apply large number effort. Firstly, you need to develop tactical and strategic thinking, read books on implementing the most correct and effective way manage risks, study risk management tactics. This is not a matter of one day or even a year. This is a very serious lesson that teaches you how to manage money. This is what underlies successful trading, because it is woven from risks.

Risk management is a very large and important part of trading. It is important to understand that a trader cannot help but face losses; this is impossible. Even a trader with incredible knowledge and experience, a brilliant tactician and a talented strategist cannot avoid losses. Even if you caught a positive wave and are in the black for a long time, there will definitely be a minus - without this there would be no trading.

Trading is like a roller coaster, but during the downturn it is important to continue to manage your cabin and control the situation, that is, the risks. If you are rushing and falling down, you should not allow risky turns and body movements. That is, you cannot enter into risky transactions; it is important to minimize losses at this time. This is the ability to manage risks.

Managing risks - how is it?

No, managing risks does not mean sitting still, saying that everything will be fine and that in general you are a superman! Believing that your tactics are the best won't help either. To manage risks, you need to start training willpower and controlling yourself. The roller coaster example is very reminiscent of relationships with people. We all have ups and downs emotionally. And during a recession, it is very easy to lose a person. You just need to minimize losses without making sharp attacks in his direction. It's the same in trading. – this is a system where everything is controlled only by you. For example, you must be prepared to do nothing at all, not make any bets, not move or breathe.

Many people often ask: if risk is part of our life and trading, then why do we need to be able to manage risks? Meanwhile, the ability to manage plays a huge and very important role. The first reason is simple self-preservation. With the help of management, you keep your money safe. By depriving yourself of the chance to communicate with a person during an emotional decline, you are deprived of losses and even potential losses. If you deprive yourself of the chance to play on the stock exchange during the risk, then you do not lose anything. Yes, managing risks is very difficult, but it helps to keep yourself in check and control your balance.

How to manage and reduce risks?

In fact, risk management is not that difficult. In trading, to learn this, you need to find a percentage that you can risk and that you don’t mind losing. This is the most difficult thing. Once you understand what percentage you are willing to lose, then under unfavorable conditions you will only trade with it. If the deal fails, you will lose the percentage that you were ready to lose. All this allows you to regulate your own comfort, prevent losses, and protect your balance from ruin. You can also work on learning how to reduce risks. How to do this?

The easiest way to play it safe is to finally get an education. Are you surprised? Yes, this is a definite way to manage risks, losses and problems. Brokers push the idea that trading is easy. This is wrong. Earning a million is difficult; this requires knowledge. Knowledge of where to go and how to move, and education allows you to enlist the help of this knowledge. To trade, you need to be savvy from all sides, and it is better that these horseshoes are knowledge. You need to read, study, learn new things, and not only in the field of trading. It is necessary to use maximum knowledge, because this allows you to work to the maximum and avoid unnecessary losses.

The second way is to always use common sense and train your analytical skills. This helps not to invest a lot, remember about losses, what percentage you are ready and can lose, and finally remember to maintain a balance. Each trader determines his own risks. The higher his skill and analytical sense, the better his control over himself, the less the chance of losing and wasting his balance. Sometimes winning is waiting. Sometimes, to win, you need to stop, freeze as beast of prey among the wilds and hunters. Being able to wait, seize the moment, and control yourself is something that every stock exchange player should be able to do.

There is one more piece of advice - you should not drink or take alcohol while trading. You should also avoid getting excited. The sages compared excitement to a racehorse that bites the bit and runs away. She can't be stopped. Her running can cause huge losses because she rushes without looking. You should not trade during stressful situations.

Some books on trading describe cases where traders began trading after quarrels with loved ones. The transactions did not bring profit, but ended in big failures. - this is something that needs to be avoided because we lose the ability to reason sensibly and intelligently. It is important to always remember that trading is not a game and fun, where you need and can have fun while drinking whiskey with ice. What is important here is composure, concentration, balance, harmony and composure. No emotions. Only calmness, like that of an animal frozen before a charge.

As a conclusion

Rationality and composure serve a good purpose in trading. Perhaps they can be considered the main regulatory elements for risk management. Composure is the elimination of emotions and experiences, their containment and eternal calm. This is difficult to achieve, but it is possible. There are special trainings that teach you to “keep your face.” Composure will not allow incoming information to pass through fear or, on the contrary, excitement and euphoria. This will be the naked analytical truth, which will allow you to see events and the situation in their true light. This is the most indispensable rule for participating in trading. If you do not know how to control your emotions, then you are doomed to defeat.

Pelin Dmitry, practicing trader!

When investing in the market, you 100% want to be a person who doesn’t just put money in a bank, you want to avoid risks, and become this very bank, where you personally could manage all the risks, investing in different instruments and getting more profit.

The better you learn to manage risk, the more risk you can take, and therefore the more profit you can make. Any business, as well as all types of financial trading, has its share of risk.

And this is where the ability to manage risks is essential.

Basically, risk management comes down to choosing the best trading strategy with which you can increase your net income.

There is a five percent rule. This general rule in financial trading: traders are advised not to risk more than 5% of their total capital on each trade.

For example, if you only have $1000 in your trading deposit, then you should not risk more than $50 on each trade. The arguments in favor of this rule are very simple: in a volatile trading area such as financial markets, no one can be profitable all the time.

Even the best traders sometimes suffer losses, but using the five percent rule ensures that your deposit will be reduced in the event of unsuccessful trades.

Due to the fact that online financial trading is very popular among individual traders, many different risk management strategies can be found on the Internet. Their huge amount, starting with hedging strategies (from the English “hedging”) and ending with straddle strategies (from the English “straddle”).

All of these strategies are designed to find the best entry and exit points when minimal risks. However, keep in mind that these strategies may be effective when trading real underlying assets, but may not work on binary options.

When you trade binary options, you are dealing with derivatives rather than the actual underlying assets. Given the way binary options are structured, the methods used to trade binary options are very different from traditional forms of financial trading.

Firstly, there is no margin trading here. This means that you can lose exactly as much as you invested.

Secondly, given that the outcome depends on the Yes/No proposition, there are no traditional complexities that you might encounter with regular trading. You don't have to worry about how much the market will move in order for your trade to end well. The only thing you should be concerned about is the direction of the price. Due to these reasons, risk management in binary options trading differs from traditional financial trading.

Here you should consider several risk management tools when trading binary options:

1) Tool "Bid"
There are few risks when trading binary options, and most binary options brokers offer a variety of risk management tools.

For example, many brokers have a “Price Offer” tool, or, in other words, simply the ability early closure transactions. After clicking this button, a window appears in which the price proposals at which the broker will be ready to buy the option from you will be displayed.

Naturally, the offered price will be slightly less than the original price. Although sometimes it happens that the offered price may be higher than the original one. This happens due to a jump in the price of the underlying asset.

At this moment, you have the opportunity to close the transaction with minimal losses for the deposit, in contrast to when the purchased option goes into negative territory and all funds from the transaction are lost.

2) Tool “TAKE PROFIT”
One more interesting tool To minimize risk, which many brokers offer is the “Take Profit” tool.

It operates similarly to the previous instrument, but towards profit. This tool issues a signal as soon as your trade becomes in-the-money.

As soon as you hear the signal, it is up to you to decide whether to terminate the trade prematurely or continue it until expiration. Now instead of losing everything possible profit after the expiration of the option, you can use the “Take Profit” tool and take your profit earlier in case the market suddenly changes sharply, but it should be said that the profit will be slightly less than it would have been if the transaction had fully expired.

3) Tool “ROLL FORWARD” or Rollowing
One of the risk management methods that binary options brokers offer you. Using this tool, you can extend the option expiration date until the next nearest time for a small commission.

Let's consider one of the cases of using this tool. For example, let's say that the chairman of the European Central Bank is going to make a statement in the near future regarding the direction of EU monetary policy. You assume that after this announcement the price of the euro will rise relative to the dollar. So you decide to invest $50 in a CALL option to buy European currency, which promises you a 70% profit.

Let's say the announcement is scheduled for 16:00 GMT, which means that the market will react to this announcement only after 16:00 GMT. Therefore, you decide to initiate the trade at 15:45 GMT with expiration at 16:15 GMT, giving the market time to react to the news.

However, halfway through the ECB Chairman's speech, you realize that he will only address the topic of EU monetary policy after your option expires, which is at 16:15 GMT.

This means that your transaction will end with the status “out of the money”. To avoid losses, for a small commission you can extend your trade for another trading period with an expiration date of 16:45 GMT.

By doing this, you will not only avoid losses, but you will also be able to earn money. And although the amount of profit will be less than the original one, you should understand that you have avoided a complete loss of the funds invested in the transaction.

This is the essence of risk management: minimizing losses and turning losers into winners.

In the world of finance, the risk of losing money is a reality, no matter how much we plan to avoid it. In fact, no one plans to lose money, but having said that, it is still worth considering how to minimize losses.

The material was prepared jointly with binary options broker Utrader

Any human activity can be associated with danger in one way or another. In a broad sense, risk is the likelihood of experiencing a loss or loss. If we are talking about business, then all these negative consequences are financial in nature. It is simply impossible to completely protect yourself from all sides. But unfavorable factors can be calculated, and, therefore, the likelihood of a loss can be reduced as much as possible. True, for this you need to have certain knowledge and skills in the business field. Moreover, sometimes only instinct can help. It was under the influence of all these requirements that a completely new and very popular specialty appeared on the labor market - risk manager. Who this is and how you can become such a specialist is the topic of today’s article.

Risks: what are they?

Speaking about this rather new sphere of human activity, it is worth noting that keyword there is still a “manager” here. And only then can we say that you can learn to predict risks somewhere. If we consider the structure of almost any business, we can identify the following types of risks:

Operating. Dangers associated with imperfect personnel policies of the company, safety violations, fraud, damage to assets, and so on. In general, everything that can happen in the process of the company falls here.

Financial. The risk that, for one reason or another, the company may be unable to fulfill its financial obligations to partners. These risks include the following:

credit;
market - a decrease in the value of assets due to various reasons;
balance sheet - the risk of balance and liquidity of existing assets.

A competent financial risk manager must be able to correctly assess each of them and calculate ways to minimize them.

Managerial. Such risks include the following:

loss of business reputation;
wrong choice of enterprise development strategy;
reduction in the company's value in the relevant market.

Other types of risks. In general, there are about a hundred types of different risks that can be classified based on the type of activity of the organization.

Description of the profession

There are many risks. is precisely what is involved in their definition, classification, analysis and control.

This is one of the leading positions in the company. IN modern realities Russian businessmen have to deal with a lot of things on a regular basis various factors, each of which can unpredictably affect the organization's performance. This is mainly due to a sharp change in exchange rates and, as a consequence, prices for goods. Interest rates on loans also fluctuate freely.

As a rule, large enterprises create an entire system for identifying and minimizing risks. In smaller ones, the risk manager is most often the manager himself.

Where do they teach this?

It is very difficult to train a specialist of this kind. That is why in the list of specialties of institutes, academies and universities you are unlikely to find such a profession as a risk manager.

A good specialist in this field should have a fairly large amount of knowledge in the following areas:

jurisprudence;
statistical analysis;
information systems;
computer technologies;
the specifics of the economic activity of the enterprise in which you will work.

Most often, applicants for the position of “risk management manager” are business leaders with sufficient work experience. Also, good managers for working with “hazards” are made from graduates of technical and mathematical educational institutions with experience in conducting mathematical and statistical analyses.

Almost the only specialized training center in this area today is the Global Association of Risk Professionals (GARP). The specialists of this company provide advanced training and centralized training programs for senior management specialists. GARP has been operating in the Russian market since 1999 and provides certification programs in the field of risk management. This Association has its representative offices in more than 100 countries and trains high-level specialists.

Responsibilities

Working as a risk manager is most often associated with assessing current affairs at the enterprise, searching for weak points and ways to eliminate them. The activities of such a specialist can be roughly summarized as follows:

identification of existing risks;
assessment of the possibility of unfavorable development of the situation;
development of an action plan to manage the process;
development of a strategy for the company’s activities to reduce possible negativity and minimize losses;
implementation of the chosen strategy;
adjusting actions if necessary;
summing up the work.

Of course, clear job responsibilities depend, first of all, on what kind of projects the risk manager manages.

What else do you need to know?

In addition to fairly extensive knowledge in the field of mathematics, economics, statistics and other areas of activity, a risk specialist will also need the following skills:

At least 2 years of experience in analytics;
ability to work with a computer at the level of an experienced user;
knowledge English language, both oral and written;
knowledge of accounting and Russian legislation in the chosen field;
knowledge of financial reporting systems;
willingness to work almost constantly under stress;
the ability to prove your point of view and defend it if necessary.

Prospects

Due to the relatively recent emergence of the “project risk manager” profession, there is not a big boom in the labor market. However, the demand for good specialists in this area there is always. And every year it only grows. Such specialists are especially in demand in companies planning to become attractive to foreign investors. Today it is mainly large banks, leasing companies and other financial sector enterprises. But every year the list of enterprises only increases.

Pay level

Since most applicants for such a position are recent graduates of higher educational institutions, the salary level for them is not too high, about 2 thousand dollars. But after several years, as you gain experience and practical knowledge, your earnings increase by about 2.5 times.

Larger companies of risk managers with experience are priced somewhat more expensively. Here wages starts from 10 thousand US dollars, and there is practically no upper limit. An experienced risk manager who occupies a top position in a company can value his services at 60-80 thousand dollars or even higher.

People who choose such a profession must not only have a lot of different knowledge, but also have a certain character. To a good professional characterized by meticulousness, attention to detail, the ability to retain a huge amount of information, the ability to work for a long time under constant stress.

How necessary is such a specialist?

The position of risk manager, focused on breaking even the existing business, is usually introduced by already established, mature companies. The introduction of such a specialist into the staff is possible and justified in the case when the enterprise already has a certain model of business processes. Otherwise, it is very difficult to distribute powers and assign responsibility for running a business. Most often, at enterprises that do not have such a specialist, risk management is still carried out. In this case, the following are delegated to other departments:

security service;
internal control unit;
financial department;
information security service;
other specialists.

In conclusion, I would like to say that business today is increasingly using a variety of information technologies, and they, as we know, are developing rapidly. Therefore, there is no guarantee that the experience of today's risk management professionals will be of any value in a few years' time. So the success of this profession, of course, depends on the level of development and self-education of applicants.

The time has come to talk about risk, which, to one degree or another, will be present always and everywhere in financial markets, no matter how much you want it. The influence of risk on the trading capital of any trader is inevitable, but it is possible to limit and minimize its influence. To do this, it is necessary to understand exactly what types of risks financial market participants are exposed to. Let us consider in detail the types of risk:

Sovereign risk. This type of risk has geopolitical roots, for example, possible changes in the economic system (revolutions, etc.), a very frequent change of government in the state, a fairly high level of corruption, broken or incomplete legislation, etc. These and similar factors will contribute to the outflow of foreign investment, which will negatively affect the overall economic situation of the state.

General economic risk. We are talking about the risk of changes in the main economic indicators of the state: GDP growth rates, increase in external debt, lack of jobs, high level inflation, etc.

Industry risk. Each specific sector of the country's economy has its own specific risks. These risks depend on many factors: on the competitiveness of a given sector of the economy, on the attention paid to this sector by the state, etc.

Issuer risk. This type of risk implies deterioration financial indicators company, arising from a number of reasons in the policy of the enterprise.

Speculative risk. Provide this type risk is the most difficult, since it arises from unpredictable events, such as various natural disasters, military operations, terrorist attacks, strikes, irrational behavior of participants in financial markets, as well as everything that is associated with the news background.

Infrastructure risk. A trader can and should control this risk independently, since this type of risk depends on the trader’s trading decisions. This refers to making a decision on choosing a broker and technical resources necessary for trading in financial markets.

These are the main types of risk. We see that trading is a rather risky activity. However, the presence of risks is not a reason to refuse it. Diversification helps to significantly limit risks in trading. Diversification is the distribution of invested capital between different objects in order to reduce risk possible losses and generating income.

According to the rules of investment, it is recommended to form your financial portfolio with the assets of not one, but several companies, and these companies should represent different sectors of the economy, since the trader cannot foresee when, for example, the owners of the enterprise whose shares the trader purchased will quarrel among themselves. And such a fact can lead to loss of profit, since securities of this enterprise will begin to fall in price. Well, and many other force majeure events.

So how can you reduce your risk? There are some risk management principles. Let's start with the fact that before any transaction, you must understand why you are making it, you must have a well-thought-out reason why you are buying something that someone wants to sell. Are you confident in this purchase?

Ask yourself what you know that the seller cannot know and, conversely, what the seller can know that you do not know. Believe me, these arguments can help you a lot. This not only reduces risk, but also gives you a little peace of mind before concluding a transaction (order).

Be very careful, you must understand that the person who is on the other side is probably much smarter, or, in any case, definitely not dumber than you. You must be very soberly aware of what you are risking. What will happen to your funds if the market moves 5%, 10% or 20% against you. Conduct an examination of transactions, and then the risk will be minimized by you.

Your second step to reducing risk is to set limits on the amount you can lose. You should always stick to a clear trading plan. If you understand that you are leaving the zone of your possible loss, then stop playing. You should not lose your money further, and if it suddenly occurs to you that the trend is about to reverse, well, just a second, a little more, then exit immediately! Ignore these thoughts.

Most likely, the trend will continue to go in its direction, and you, in turn, will continue to lose your money. A sound trading plan will also give you a sense of confidence, so you should follow it.

The third step to reducing risk. Diversify. Or, to put it simply, you shouldn't throw all your money at one trade. You should trade no more than 1-3% of your capital (trading 5% is possible, but this is just “space”). Place stop orders in advance (think SL and TP). Follow these established data.

Before you enter into a trade, make sure you have enough capital to cover an unexpected loss. If an opportunity appears to be unexpectedly profitable, then you may be overly optimistic. Markets are usually rarely as good as they may seem at first glance.

If the market suddenly goes down unexpectedly, it is wise to have some capital at your disposal to compensate for small possible losses. You can use certain stop signals. They will allow you to quickly recognize when the market has not gone as you expected, at which point you can quickly exit the game, even if you have not lost your money. You should do this only out of the conviction that you should trade with the trend, because not a single trader has ever been able to convince the market.

An important quality of a trader is the ability to admit your mistakes when you are wrong. This will also help reduce risk. Keep your bets small and your number of trades small. Every trader must first learn not to lose money, and only then earn it, so be happy even when you make a little money. Control your emotions and, if in doubt, quit the game, because uncertainty, as you already understand, gives rise to fear. If the market does not behave rationally, or uncertainty lurks within you, or you do not know what to do in at the moment- leave the game.

Step 13. Types of market analysis. We consider technical and fundamental analyzes

“The main thing in chess is not how many moves you think about, but how you analyze the current situation.” Garry Kasparov.

In the work of a trader, as well as in chess, the main thing is the analysis of the current situation, market analysis. This is the part without which a trader simply does not exist. Let's postpone lyrical digressions and continue to learn how money is made. There are only two types of market analysis (perhaps you will invent a third, or it has already been invented, but it’s time for me to retire).

It is not difficult to guess that this is fundamental analysis and so-called technical analysis. There have always been discussions in society about what type of analysis is better? Honestly, I’ll tell you that you need to use both in trading. I suggest taking them apart separately.

So, fundamental analysis (hereinafter referred to as FA). FA is an analysis that takes into account economic, social and political factors that may affect the market situation. State policies always affect its economy, always follow the latest events. In other words, you must simply observe the state of the economy itself, determine whether it is good or not.

The point of this analysis is that if the economy of a country is very stable, then the currency of that country will also be stable. Other countries will have more confidence in the currency of a country with a stable and strong economy. Well, once again in a nutshell. For example, the US economy has become weaker, the dollar has also lost its former strength, after a while, when the economy strengthens again, it will rise interest rate to avoid inflation, and eventually the dollar will begin to rise again. This is how you can describe fundamental analysis in a few sentences. The essence of FA can be seen in a wonderful diagram that I dug up on the Internet.

Figure 30

And now the most boring part. I myself will not tell you which events affect the movement of currencies most intensively; you will do it yourself. Please note that what you do will be the basis of your fundamental analysis, so take your information search very seriously.

I will not specifically write the answer here, since you must understand all this yourself, and it is not I who must “chew” the material for you and “put it in your mouth.” You can find the correct answers at the link: http://qps.ru/CMqUH. I leave you some room for thought.

Well, now let's look at technical analysis (hereinafter referred to as NF). TA is the study of price movements. In a word, technical analysis is charts. The idea is that a trader looks at the history of price movements and, based on their past behavior, can predict their behavior in the future.

By viewing and analyzing the chart, you can find trends and patterns that can help you in your trading.

Figure 31

The presented graph shows two things. The first is that the price maximum level has changed, it has become lower and this limit has been set. The second thing is that the chart was unable to break through this established limit, which means we can make an assumption about further downward development of the chart. Having understood all this in time, the trader could make money on this transaction.

Technical analysis has a special feature: it helps to determine market movements at the very beginning, thereby providing good opportunities for further trading. The main thing you must understand is that the trend is not your enemy, but your friend. Now, ask me which type of analysis is better and I will answer you that they are both necessary. Here's one example:

Figure 32. Example.

The story may be dramatic, but the point is that the financial market, like Feng Shui, consists of black and white. From both. Something like that.

Figure 33