Risk management strategies are based upon four main principles:
1. Maximal earnings
Out of all possible options of risky investments, the investor chooses the one that gives higher efficiency of economic results under minimal risks, acceptable for the investor.
2. Optimal result possibility
Out of all possible decision options, the investor chooses the one that gives acceptable probability of result, in other words — bearing maximal financial results.
3. Optimal result volatility
Out of all possible decision option, the investor chooses the one that gives a smallest gap between the possibility of winning and losing situations.
4. Optimality of correlation between gain and risk amounts.
The algorithm must evaluate the expected amount of gain and risk (losing) and make the decision to invest in options that would allow to get the expected level of gain and simultaneously avoid high risks.
Risk-management strategies we use eliminate the possibility to suffer losses over the planned amount and allow gaining profit even when successful deals make only 30% of the total amount.