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Because at the beginning of the year, you have to be extra careful and take more cautious trades to not step outside your 2% loss limit, but at the end of the y
by atemerev 10y ago
Because at the beginning of the year, you have to be extra careful and take more cautious trades to not step outside your 2% loss limit, but at the end of the year, assuming you are successful, you can afford e.g. 5% loss limit, as you have already made 10% in profit, so you are able to engage in more risky trades.
As this policy were made public at some point, and you usually don't disclose your working risk management profile to the outside world (as it can and will be analyzed and exploited), I can assume that BlueCrest now uses a different approach internally.
- qwrusz 10y agoGot it. Thanks. The assuming successful by end of the year is an important part. At the same time, some traders hit a profit number during the year they are happy with and then try to lock it in, choose to go risk off and just coast till the end of the year. Especially if a trader feels they don't get paid for risk towards year end - this option is even more attractive. Assuming the goal is to make profit and not just don't get kicked out. Traders who got lucky mid year not taking enough Q4 risk happens. Some firms step in if they see too little risk from a desk. Very few funds are able to keep risk management info private for very long. People move. People talk. Some trading rules can be reverse engineered in data but this is easily spoofed. BlueCrest closed last year and returned outside capital, so I agree things probably look very different there now.
- samuraijs 10y agoYou could have different end-of-year dates for each trader...