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What are Risk Management Tools?

Nimbus’s Risk Management Tools provide a comprehensive suite of features designed to protect your capital, limit losses, and optimize risk-adjusted returns across all your automated trading strategies.

Portfolio Protection

Safeguard your capital with automated risk controls

Position Sizing

Optimal allocation based on risk tolerance

Loss Prevention

Stop-loss and take-profit automation

Exposure Monitoring

Real-time risk exposure tracking

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Core Risk Management Features

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Portfolio-Level Risk Controls

Set portfolio-wide drawdown limits to protect against significant losses - Daily maximum loss thresholds - Weekly and monthly drawdown caps - Automatic strategy pause when limits are reached - Gradual re-entry protocols after recovery
Monitor and limit correlation between strategies - Cross-strategy correlation monitoring - Automatic diversification suggestions - Market regime correlation analysis - Dynamic correlation-based position sizing
Control overall market exposure and concentration risk - Maximum portfolio allocation per asset - Sector and market cap exposure limits - Geographic diversification requirements - Leverage limitation controls

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Strategy-Level Risk Controls

Intelligent position sizing based on multiple risk factors - Kelly Criterion: Optimal bet sizing based on edge and odds - Volatility Scaling: Position size inversely proportional to volatility - Risk Parity: Equal risk contribution from each position - Maximum Risk per Trade: Fixed percentage risk limits
Multiple stop-loss types for different market conditions - Fixed Percentage Stops: Simple percentage-based exits - Trailing Stops: Dynamic stops that follow price movements - Volatility-Based Stops: ATR-based stop placement - Time-Based Stops: Maximum holding period enforcement
Intelligent profit-taking to lock in gains - Fixed Target Levels: Predetermined profit targets - Scaling Exits: Partial position closures at multiple levels - Dynamic Targets: Profit targets adjusted based on volatility - Risk-Reward Ratios: Maintain optimal risk-reward profiles

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Advanced Risk Analytics

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Real-Time Risk Monitoring

Monitor your portfolio’s risk exposure in real-time with comprehensive risk metrics and alerts.
Key monitoring features include:

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Risk Metrics Dashboard

Statistical measure of potential portfolio losses - 1-day, 1-week, 1-month VaR calculations - Parametric and historical simulation methods - Confidence levels (95%, 99%, 99.9%) - VaR breakdown by strategy and asset
Track and predict potential drawdown scenarios - Historical maximum drawdown by period - Monte Carlo drawdown simulations - Recovery time analysis - Drawdown correlation with market conditions
Monitor and optimize risk-adjusted returns - Portfolio-level Sharpe ratio tracking - Strategy-specific Sharpe ratios - Rolling Sharpe ratio analysis - Benchmark comparison

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Risk Scenario Analysis

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Stress Testing

Regular stress testing helps prepare your portfolio for extreme market conditions.
Nimbus’s stress testing features include:

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Scenario Types

Test portfolio performance against past market crashes - 2008 Financial Crisis simulation - COVID-19 market crash (March 2020) - Dot-com bubble burst (2000-2002) - Crypto winter scenarios (2018, 2022)
Generate thousands of potential market scenarios - Random walk price simulations - Volatility clustering models - Correlation breakdown scenarios - Tail risk event simulations
Create tailored scenarios for specific concerns - Regulatory change impacts
  • Exchange downtime scenarios - Liquidity crisis simulations - Black swan event modeling

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Automated Risk Controls

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Dynamic Risk Adjustment

Enable automatic risk adjustments to maintain consistent risk levels as market conditions change.
Features include:
  • Volatility Regime Detection: Automatically adjust position sizes based on market volatility
  • Correlation Monitoring: Reduce allocations when strategies become highly correlated
  • Market Regime Recognition: Adapt risk parameters for bull/bear/sideways markets
  • Liquidity Adjustment: Reduce position sizes in illiquid market conditions

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Emergency Protocols

Automatic trading halts during extreme market conditions - Portfolio loss thresholds (e.g., -5% daily loss) - Individual strategy loss limits - Market volatility circuit breakers - Manual emergency stop functionality
Manual intervention capabilities for extreme situations - Immediate strategy shutdown controls - Position liquidation protocols - Risk parameter emergency adjustments - Admin notification systems
Structured re-entry after risk events - Gradual strategy restart protocols - Risk parameter recalibration - Performance validation requirements - Market condition assessments

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Risk Configuration Options

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Portfolio Risk Settings

Configure your overall portfolio risk parameters:

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Strategy-Specific Risk Controls

  • Maximum averaging down levels - Dollar-cost averaging frequency limits - Portfolio allocation caps - Market condition overrides
  • Maximum grid levels - Grid spacing limitations - Total grid investment caps
  • Price deviation thresholds
  • Signal confidence thresholds - Maximum trades per signal - Signal correlation limits - False signal detection

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Risk Reporting and Alerts

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Automated Risk Reports

  • Current VaR and exposure levels - Risk limit utilization - Strategy risk contributions - Market risk factor exposure
  • Risk-adjusted performance analysis - Correlation matrix updates - Stress test results summary - Risk parameter recommendations
  • Comprehensive risk model validation - Historical accuracy of risk predictions - Portfolio risk evolution analysis - Strategic risk management recommendations

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Real-Time Risk Alerts

Set up instant notifications for:
Configure risk alerts to receive immediate notification of potential portfolio threats.
  • VaR threshold breaches
  • Correlation spike alerts
  • Maximum drawdown warnings
  • Position size limit violations
  • Market volatility regime changes
  • Strategy performance degradation
  • Liquidity risk increases

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Risk Management Best Practices

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Position Sizing Guidelines

Follow these position sizing principles to maintain optimal risk levels across your portfolio.
  1. Never risk more than 1-2% per trade on individual positions
  2. Limit strategy allocation to maximum 20-25% of total portfolio
  3. Maintain correlation limits below 0.7 between strategies
  4. Reserve cash buffers of at least 10-15% for opportunities
  5. Regular rebalancing to maintain target allocations

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Risk Monitoring Checklist

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Risk Management API

For programmatic risk management: 
{
  "endpoint": "/api/v1/risk/portfolio-risk",
  "parameters": {
    "risk_metrics": ["var_95", "max_drawdown", "sharpe_ratio"],
    "time_horizon": "1d",
    "confidence_level": 0.95
  },
  "response": {
    "var_95": -0.0234,
    "max_drawdown": -0.0456,
    "sharpe_ratio": 1.23,
    "risk_alerts": ["correlation_spike"]
  }
}

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Next Steps

Performance Analytics

Analyze your risk-adjusted performance metrics

Risk Management Best Practices

Learn advanced risk management strategies

Backtesting Engine

Test risk management rules with historical data

Portfolio Dashboard

Monitor risk in real-time on your dashboard
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