Modern finance · 1950s–1990s
1994
Measuring risk in dollars
J.P. Morgan publishes RiskMetrics, popularizing value at risk.
In 1994 J.P. Morgan made its RiskMetrics method public, letting firms estimate how much they could lose on a bad day.
💡 Why it made sense then
Firms with huge trading books needed one number for their risk.
Ideas it gave us
- 🎯 Risk management
Risk management in trading is limiting how much you can lose, through position sizing, stop-losses, diversification and avoiding too much leverage.
Practise with $10,000 in play money
Free. No real money involved.