Goldenschild ยป Managing Currency Risk

Managing Risk

Uncompromising Risk Management

Superior performance in any managed portfolio would not be possible without the proper implementation of strict risk management.  By taking minimal risk in all our investment strategies, we aim for superior returns in your portfolio without compromising the safety for your investment capital.  This is why, at Goldenschild, we place preventing losses and minimizing market exposure our highest priority.

Risk management is the largest focused component within the Goldenschild trading system.  It is considered to be the most critical factor that will determine if a trading system is successful at producing profits consistently from the market.  Proper risk exposure and disciplined money management techniques form the solid base from which Goldenschild's robust trading system functions.

Position Sizing

The position sizing component of Goldenschild's trading system is derived from a volatility based algorithm.  We have specifically developed our trading system to determine the optimal position size for all trades preventing any over exposure in the markets and ultimately minimize risk in the overall portfolio.

Volatility refers to the amount of price movement of an underlying instrument over a specified  time period.  By calculating the current market volatility in conjunction with a predetermined fixed percentage amount of the total equity, the overall risk of the entire portfolio is evenly spread out.  For example, in a highly volatile market situation, our trading system is designed to trade fewer Forex contracts which will only expose the portfolio to less risk.  Conversely, during normal or low volatile market conditions, our system will increase the position size of certain trades to potentially produce more profits without incurring any additional risks to the portfolio.

Under certain market conditions, our volatility parameters may indicate that certain trading opportunities can only be established in larger funded accounts.  There may be situations where certain trades will be too risky and not suitable for the smaller funded accounts due to our strict risk management guidelines.  Because of this, the average rate of return on investments may vary depending on account type.

Stop-Loss & Take Profit Orders

The Goldenschild trading system uses risk management and risk control strategies designed to cut losses short and let profits ride.  Our risk management principle dictates that using stop-loss orders and profit target exits are necessary in controlling market risk exposure.

A stop-loss is an exit order that is used to limit the amount of loss in a loosing trading position.   Stop-loss orders are entered concurrently with market entry orders in all Goldenschild's trades.  They are set, as a protection, to quickly exit a trading position if the market suddenly moves drastically against us.

Meanwhile, take profit orders are placed so we will "lock in" profits once our positions reaches the predetermined price that we predict a trading instrument is intended to move towards.  In certain instances, take profit orders are modified in real time to take advantage of changing market conditions that could yield more potential profits while still locking in intended trading revenues.