Aggregate Risk
The total combined risk exposure across all open positions and instruments in a trading portfolio.
Aggregate risk is your total exposure across every open position, including how they correlate. Individually safe trades can combine into dangerous concentration.
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
Related Terms
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