Trading Risk: Enhanced Profitability Through Risk Control (Wiley Trading) (Hardcover)

No trader, professional or individual, can afford not to have a solid risk management program integrated into his or her trading system. But finding a precise mathematical model to replace subjective decision–making processes is a challenge. Traditionally, risk management has focused solely on loss avoidance, but in Trading Risk, hedge fund risk manager Kenneth Grant presents some–thing completely new—how to manage a portfolio to minimize risk and increase profits by putting more capital at risk. Trading Risk details a risk management program that can help both money managers and individual traders evaluate which elements in a portfolio are working efficiently and which aren’t. By illustrating an extremely simple set of statistical and arithmetic tools this book can help readers enhance their performance in many financial markets.

Kenneth L.Grant is Cheyne’s Global Risk Manager, and is the Managing Member for Cheyne Capital, LLC, the firm’s U.S. arm. Mr. Grant is a pioneer in the field of hedge fund risk management and capital allocation. Before joining Cheyne, he created risk control programs at two of the world’s leading hedge funds, Tudor Investments and SAC Capital, where he was eventually promoted to the title of Chief Investment Strategist. Mr. Grant holds a Bachelor of Science in Economics and Mathematics from the University of Wisconsin, an MA in Economics from Columbia University, and an MBA from the University of Chicago Graduate School of Business.

Kenneth Grant has managed portfolio risk for several of the world’s most elite, successful hedge funds. Now, he shares his trade secrets, showing how the aggressive trading that is the signature of leading hedge funds can be applied by traders at all levels without excessive risk. Trading Risk offers revolutionary yet practical techniques for real–world traders, not superficial theories or complex quantitative formulas. Grant’s proven scientific strategies are presented in accessible language any trader can understand–and put into practice.

Many professional traders are constrained by firm–wide risk management rules that stifle major growth. Individual traders are often overwhelmed by books presenting quantitative formulas that practically require PhDs to implement. Both kinds of traders too often default to a loose collection of subjective rules of thumb. Grant’s system is a simple yet effective solution–and it strips away much of the subjectivity that makes major deals appear too hazardous for many traders.

Using an extremely simple set of statistical and arithmetic tools, Grant illustrates how to evaluate which portfolio elements are working and which are not. He then shows you how to control your exposure–and prepare for inevitable periods of suboptimal performance without going bust. Grant also helps you interpret the statistical makeup of your portfolio, and discusses how to use these statistics to make decisions consistent with both your financial objectives and your constraints.

Trading Risk demonstrates that traders virtually always have control over their portfolios and that risk can be managed even during the worst market crises–from Enron to the tech bust. With this book in hand, you’ll be able to devise and execute a customized risk management strategy. Whatever type or level of trader you are, Trading Risk offers the key to dynamic investing that doesn’t leave your assets out of control.