Risk per position

The risk per position is defined as the difference between the purchase value and the limit value of the position. At the time of purchase, the limit will of course be below the purchase price, resulting in a greater or lesser risk depending on the width of the stop.

If the value of the security develops positively, the stop can and should be tightened. (The limit management options are of course taken into account, i.e. if trailing loss limits or progressive stops are used, the limit is automatically included. Further information on this can be found in the section Signals and limit monitoring)

Tightening the stop reduces the risk against the purchase price. As soon as the stop is above the purchase price, the position is risk-free. The stop then serves to secure profits.

This risk exemption can be used to build up new positions. Such risk-free positions are converted into new risks in two ways: On the one hand, the risk relief can be used directly for new investments; on the other hand, the positions increase the asset value as they are in the profit zone and thus generate new risk capital. This enables a geometric performance.

Positive portfolios therefore allow trading to be expanded, while negative portfolios require restraint.

The risk of each position is defined and monitored by stop limits. If necessary, it may make sense to secure these limits with stop-loss orders.

Further information on limits can be found in the section Signals and limit monitoring.