The application of risk management into all different facets of one’s life is a very interesting idea to process. The intention of this post is share, organize and formulate some of my thoughts regarding this subject and at some points it will likely seem as if I am asking more questions than I am answering.
What IF one would consciously apply the same risk analysis or process they do when it comes to trading into their everyday life, what would this look like? Why would someone do this? Are their any benefits or consequences?
What IF one would consciously apply the same risk analysis or process they do when it comes to trading into their everyday life, what would this look like?
I would argue we unconsciously do this everyday just likely not to the degree in which we implement when it comes to the markets. We usually focus more on the benefits than the risk associated with it, but none the less, we use risk management often. Everyday when we wake up we decide whether or not it is worth the risk to drive to work to get paid, eat out at a restaurant to experience the pleasure in eating tasty food, or even asking a girl/boy out on a date in the hopes of them saying yes and beginning a relationship. There are countless examples, the point is we make risk management decisions every day, it is just we are not always aware of it.
Why would someone do this? Are their any benefits or consequences?
The interesting area of analysis comes in when you begin to imagine what it would be like to consciously apply this to your life. If one would do this, they would likely analyze every situation uniquely, tabulate the potential risk and then imagine the potential reward – the same process used to trade. I believe that if this risk management we apply everyday is applied to a greater extent, perhaps we would all make wiser decisions as we would be consciously analyzing what is the benefit for the risk being taken in a particular activity instead of simply imagining the reward.
Simply some primarily thoughts to think about heading into the open today, there is much more to consider regarding this subject. Please share your thoughts with me via Twitter/Stock-Twits or Email (Contact Page)!