Risk management is part of the design process of trading strategies. That means that all robots have, one way or another, risk management.
Initially, when you develop the robot we think of an idea; an objective to achieve with the system. Straightaway, we define the rules the robot will use. Following the results, we obtain from simulations, we make the same process as before but making changes in the system, always from the mathematic expectation point of view (seeing the percentage of success, average benefit, and average loss).
Finally, once the system obtains a statistical advantage, we apply risk management. ¿How much risk I am willing to assume with my strategy? ¿How many batches are we going to open in each order? ¿Are we going to operate with a fix or a variable batch? Those are the adjustments done at the end of the robot where we will apply risk management.
