What is risk?
Risk is much more than the risk of loosing your investment in a stock or a fund. It is also technological risk for a new online store, for not being seen on the net, as illustrated by the banner above. Downside risk is risk for loosing your investment. VaR (Value at Risk) may be extended to include the overall risk exposure of a company as financial, default, political, credit and technological. Stress testing based on Montecarlo simulation or simulation using historical data is a method developed to understand and be able to handle extreme situations. It may be compared to a pilot using a flight simulator to train himself to handle turbulence and other difficult situations.
This site has many links to Elliott Wave International where the Elliott Wave principle is explained in detail. Boiled down, even if this is not a trivial statement, you should
- Decide on your time horizon, and
- invest with the preferred wave count.
- There are situations when there is no better investment than cash in solid banks, unless you ar a pilot, able to handle turbulence.