Tail Risk
The risk of rare but severe events far out in the distribution of outcomes, which standard models tend to underestimate.
Appears in these guides
Related terms
Related lessons
Portfolio Risk: Exposure, Scenario Losses and Model Limits
Calculate how holdings combine into portfolio losses, uncover overlapping exposures and distinguish volatility estimates from liquidity and funding risk.
Position Sizing
The most important and most ignored decision in trading: how much to commit to a position. The percent-risk rule, the position-size formula that turns a stop into a share count, volatility-based sizing, and why how much you risk matters far more than what you buy.
Risk/Reward & R-Multiples
The framework that ties wins, losses and probability into a single judgement of whether a strategy makes money. The risk/reward ratio, thinking in R-multiples, the expectancy formula, and why a strategy that loses more often than it wins can still be highly profitable.
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