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The asset diversification requirements for one type of investment company are listed.
Where are the legal requirements for all funds for maximum drawdown?
The asset diversification requirements for one type of investment company are listed.
Where are the legal requirements for all funds for maximum drawdown?
I have no idea where they are.
I never said anything about "statutory maximum drawdown requirements for all funds".
Are you making it up as you go along? Or have you lost the ability to read Russian abroad?
Of course he can't - if you say "in dollars". Profit in dollars of the deposit does not change if the size of the position is equal.
What I meant was - it changes IN PERCENTAGE TO THE DEPOSIT. The most dangerous events - stop-out and margin call are declared according to the percentage of your equity, not its size.
If the position size is equal, your equity will change differently (as a percentage value) when the price changes, depending on the leverage. It happens because with higher leverage, the share of your deposit for opening one lot may be LESS, but no one makes a smaller position, and everyone is greedy for higher profit percentages.
That is the point of MM - to calculate the size of the position so that the RISK (i.e. drawdown) does not exceed a certain PERCENTAGE of the deposit. It is a basic rule, which even in the USA is legislated for fund managers.
Leverage is an EXPENSIVE PERCENTAGE of fluctuations in your equity depending on price fluctuations. This is the flip side of the effect of leverage. On the one hand it reduces the margin required for trading, and on the other hand it increases profits AND interest drawdown. Except that the drawdown, which with 1:100 leverage can be the same as growth (that is 20% and 100% per month), beginners forget due to their greed or ignorance, or arrogance.
It is a double-edged sword.
Yes?
Sure didn't say anything about "statutory requirements for all funds to have a maximum drawdown" ?????
Who could have said that, then.......
Yes?
Definitely didn't say anything about "legal requirements for all funds to have a maximum drawdown" ?????
Who on earth would say that.......
I don't know who would say that.
For those who have not graduated from high school: the risk of the investor (trader) when a company goes bankrupt is equal to the original value of the shares of that company. The loss of the fund manager (trader) (i.e. drawdown) is 100% of the margin on the position (leverage 1:1). It is legally established - for fund managers who manage other people's money (especially pension funds) that the size of the deposit allocated to one share (one asset) cannot exceed 5% of the deposit (investors' funds). In that case the drawdown does not exceed 5% - in case the company is completely bankrupt and has zero residual value.
That's 5th grade high school.
Diversification and the 5% threshold are enshrined precisely to limit drawdown and nothing else. Because drawdown and risk are the same thing.
That is all that is written in the laws and what I said.
Excuse me, is there anyone else here besides angry, gnashing trolls and fourth graders who don't get promoted to 5th grade because they get F's in maths and Russian?
Aww!
I don't know who would say such a thing.
For those who have not graduated from high school: the risk of the investor (trader) when a company goes bankrupt is equal to the original value of that company's stock. The loss (drawdown) is 100% of the margin on the position (leverage 1:1). It is legally established - for fund managers who manage other people's money (especially pension funds) that the size of the deposit allocated to one share (one asset) cannot exceed 5% of the deposit (investors' funds). In such a case, the drawdown does not exceed 5%. That's 5th grade high school. Diversification and the 5% threshold are enshrined precisely to limit drawdown and nothing else. Because drawdown and risk are the same thing.
That is all that is written in the laws and what I have said.
What a load of crap.....
1. What do drawdown and diversification have to do with it? The 5% requirement is a requirement for PORTFOLIO DIVERSIFICATION, not for drawdown. And NOBODY wrote on this forum "That's the point of MM - to calculate the size of the position so that the RISK (i.e. drawdown) does not exceed a certain PERCENTAGE of the deposit. It is a basic rule, which even in the USA is legislated for fund managers.
2. "Funds" are not just pension funds in the US, but also, for example, hedge funds, for which even this 5% requirement does not exist.
The pension fund has accumulated a stake of 20 shares at 5% of capital each.
It has met the diversification requirement.
ALL 20 stocks fell (stock market crash or collapse in a sector such as oil companies).
The pension fund went bankrupt, while fully complying with the diversification requirement.
How diversification and drawdown are related????
What a load of crap.....
1. What does this have to do with drawdown and diversification? The 5% requirement is a requirement for PORTFOLIO DIVERSIFICATION, not for drawdown. And NOBODY wrote on this forum "That's the point of MM - to calculate the size of the position so that the RISK (i.e. drawdown) does not exceed a certain PERCENT of the deposit. It is a basic rule, which even in the USA is legislated for fund managers.
2. "Funds" are not only pension funds in the USA, but also, for example, hedge funds, for which even this 5% requirement does not exist.
And I didn't write "all funds".
I know exactly what I'm quoting. You don't seem to be.
You obviously have a problem with either the Russian language or emotional instability. You are making up things that do not exist.
And I didn't write "all funds".
I know exactly what I'm quoting. You don't seem to.
You obviously have problems with either the Russian language or emotional instability. You are making things up that aren't there.
The pension fund has accumulated a stake of 20 shares at 5% of capital each.
It has met the diversification requirement.
ALL 20 stocks fell (stock market crash or collapse in a sector such as oil companies).
The pension fund went bankrupt, while fully complying with the diversification requirement.
How diversification and drawdown are related????