Suppose we have selected the platforms where we will send our money to begin our trading activity and we have determined the total amount that we will invest. But how should we determine the appropriate allocation of our total capital, so as to avoid that a possible unexpected permanent shutdown of a trading platform will have as a result to lose our money in a moment? Following the risk management stages we mentioned earlier, we have the following:
• Risk identification: The unexpected permanent shutdown of a trading platform.
• Risk quantification: € 20,000.
• Risk handling: Capital allocation according to the platform’s degree of risk. We assume that the larger the volume of transactions of a platform, the less the risk is to close permanently and unexpected.
• Re-check at regular intervals: Every 1st of the month we review the ranking of each platform where we hold money and at the same time we calculate the total value of our capital.