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What Does Risk Adjustment Mean?
What Does Risk Adjustment Mean?

Definition of risk adjustment

Steve Rosenblum avatar
Written by Steve Rosenblum
Updated over a week ago

Libertify's risk-adjustment investment philosophy aims to "consistently extract the maximum return from an asset relative to the level of risk assumed."

In other words, risk-adjustment is a method of managing or adjusting your risk to maximize every return.

In volatile markets, every trading opportunity is fraught with uncertainty. By risk-adjusting, you allocate a percentage of your assets to cash as a loss buffer, leaving the remainder of your assets in the market to maximize gains should the market change. This allows for both protection and performance.

Since the technique requires 1) 24/7 monitoring of the markets, 2) an in-depth understanding of your risk level, and 3) the ability to consistently make emotionless, level-headed decisions, it is almost impossible for a human to manage alone. Because of this, Libertify has automated this process for you.

Libertify's Tiger client profiles for example outperformed the buy & hold market by 93% for BTC between June 2021 and July 2022 by continuously risk-adjusting on over 90 trades.

To trade risk-adjusted, you are required to calculate the Risk-Reward trade-off and calculate potential returns at every investment opportunity. Investment opportunities are found both in the ups and downs in the market.

"Risk-adjustment is possibly the most optimal long term investment strategy for investors.

Credit : Trading campus

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