My own definition of a risk event (go figure) – An event that puts you at risk.
We’ve all got our own tolerance for risk, as a particular event (such as the FOMC announcements tomorrow) that may be considered a “risk event” by one individual, may have absolutely no significance to another. There are many factors to consider – and it really comes down to the individuals circumstances and/or evaluation at the time.
I for one – have an extremely high tolerance for risk.
Almost to a point of fault, I have been known to walk down the odd dark street at night just to “see what’s down there”, or perhaps hail a cab with no real “company name” visible on the door – however…..
I do not take undo risk with my investment or trading decisions.
The best suggestion I can make centers on the simple question of “whether or not its worth it” as a risk event approaches – and more often than not the answer comes back the same….absolutely not.
- Could something occur tomorrow that could potentially jeopardize the profits I am currently seeing on the table?
- Could I find myself deep underwater tomorrow in the case that something completely unexpected occurs?
- Am I going to miss “something massive” if I am not fully invested and exposed to the market?
Questions like these are healthy, and can go a long way in preserving capital in these volatile times – let alone reduce risk considerably.
Consider your risk tolerance. Ask yourself – Is it really worth it….. for a couple of points or two?
An aside – I have little doubt that tomorrow’s FOMC announcements/outcomes will result in markets moving higher, and the dollar getting sacked. However – it may not play out as “matter of fact”. I have 100% confidence that any trade opportunity that is currently available to me – will equally be available to me tomorrow (and likely the next day for that matter). Do I care?….nope…not really.
Kong banks an additional 2% on the day – and back to the ol favorite – 100% hard cold cash.