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Why do traders accept black swan risk?

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Market Wizard
Boca Raton
Trading Experience: Advanced
Platform: Variety
Broker/Data: Optimus Futures, LLC
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Posts: 2,419 since Sep 2010
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What do backtesting, market makers, liquidity providers, etc. have anything to do with the fact that traders are willing to accept Black Swan risk?

Black Swan risk is random, unpredictable and no one accepts it because no one can define it, let alone quantify it.
All the disasters we had from the DOT COM, LTCM, and the recent Housing Bubble were a crisis that very few statisticians predict. So you asking retail traders why they accept Swan Risk? They don't. If anything, I feel retail traders have more sense of fear as opposed to the greedy institutions that can run risky models until they are bankrupt.

Matt Z
Optimus Futures

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