Earlier this week I was on a flight from LAX back to Melbourne.
As we were sitting on the plane waiting for our departure I overheard a flight attendant say to a fellow passenger that one of the other planes had been struck by lightning causing delays to other flights.
At the time I didn’t know if a lightning strike on a plane was a bad thing, it sure sounds like something you don’t want to experience, however it got me thinking about the risks of flying.
Now admittedly, it’s probably not the best thing to be thinking about just before the plane takes off for a 16 hour flight across the Pacific ocean at night but luckily my thoughts quickly switched to trading and the risks we face as traders.
And one of the concepts which immediately came to my mind was ‘risk of ruin’, which we first discussed way back in episode 2.
In that podcast interview, futures trader Brent Penfold says:
“In my humble opinion, I think the risk of ruin is number one or the most important concept in trading.”
I want to share a little bit more of that audio with you now, because it explains:
- Why risk of ruin is such an important concept for traders to understand,
- What traders need to know about risk of ruin,
- How to calculate your own risk of ruin.
Plus I’ll share what happens to a plane when it’s struck by lightning, so take a listen.
Want to know more on Risk of Ruin?
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