Four major risks

There are many types of risks, and there are many ways to measure them. Some big risks arise from relatively rare events that may not occur a few times in 10 years; others are more common and may occur several times a year. Most traders worry about four main types of trading risks:

· Decline: A series of losses that shrinks your account.

· Low returns: The returns are so low that the money you make is negligible.

· Price volatility: A sudden change in price in one or more markets results in significant and irreversible losses.

· System death: A change in market conditions causes a system that once worked to suddenly fail.