145 – Protecting capital through proper risk management with Aaron Brown

I think it’s pretty safe to say we’ve had some interesting times in the markets so far this year.

There has been an increase in uncertainty, higher volatility and even outside of the markets there have been a number of events that seem to be impacting the markets.

Some traders may be seeing the current market environment as riskier than it has been in the recent past, while other traders may be enjoying the increased opportunity, but whichever way you look at it, there is something that all traders need to consider if they want to last a long time in this business, and that is how to protect capital through proper risk management.

The guest on the show this episode is risk management expert Aaron Brown, who has worked for JP Morgan, Morgan Stanley and even spent 10 years as risk manager for quant based hedge fund AQR.

In our chat today we’re going to cover some interesting and practical aspects of Risk and Risk Management, and how we can plan for and protect ourselves, which you may find incredibly timely given recent market developments. Some of the things you’ll discover in my chat with Aaron are:

  • The biggest misconception about risk and how traders should really be looking at risk instead,
  • Why low volatility environments can be riskier than high volatility environments,
  • One of the biggest risks that can be hard to measure but can impact all traders, plus how to prepare for it,
  • How traders should approach drawdown management,
  • Why correlations are ‘mythical’ and the right way to think about financial markets,
  • Risks in the markets today.

''With risk management, you really have to be right 99% of the time.'' - Aaron Brown Click To Tweet


  • You can learn more from Aaron at eraider.com
  • Books mentioned in the show:

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''I actually think the problem with this market is lack of profit opportunity, not too much risk.'' - Aaron Brown Click To Tweet

''There’s an infinite number of things that can happen, but there’s actually a fairly small finite number of ways they work out.'' - Aaron Brown Click To Tweet

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