Dollar Risk: Dollar Index

Dollar Risk measures potential dollar loss, should the market hit key support or resistance levels during the trading day. It acts as a reality check for traders as it quantifies true risk on a per contract basis. Trader unwilling to accept the dollar risk associated with the market should consider less volatile markets.

Calculating Dollar Risk

Dollar Risk analyzes risk from both the Long and Short side of the market.  The Long dollar risk measure daily low returns by month over the past 15 years.  It then calculates a conservative (left bar) and aggressive (right bar) dollar targets for the days trading.  Short dollar risk is calculated in the same manner, with conservative and aggressive targets, but its focus is on daily high returns.  In either case, traders should expect dollar risk to fall within the Long or Short (conservative to aggressive) range on a per contract basis for the trade day listed. Trade accordingly and within risk levels.

Dollar Risk: Dollar Index