Technical

Aggregate Risk

The total combined risk exposure across all open positions and instruments in a trading portfolio.

Definition

Aggregate risk is the sum of all risk exposures a trader holds across every open position, asset class, and market. Rather than evaluating each trade in isolation, aggregate risk considers how positions interact, including correlations, offsetting hedges, and concentrated exposures. Individual positions that look safe on their own can create dangerous exposure when combined, especially during correlated selloffs.

How It Works

Calculated by summing the potential loss from every open position, accounting for size, leverage, and stops
Correlation matters: going long EUR/USD and GBP/USD doubles your effective USD short exposure
Typically expressed as a percentage of total account equity
Stress testing applies extreme market scenarios to all positions simultaneously

Trading Tips

Before opening a new trade, check how it affects your aggregate risk

Watch for hidden correlations when trading multiple pairs sharing the same base or quote currency

Set a hard cap on aggregate risk as a percentage of your account

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