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Preparing for a black swan event in the financial markets – City A.M

Simudyne has been featured in City A.M.

Check out the full article here.

Excerpt

We are currently in a period of unprecedented geopolitical uncertainty, and the need for improved risk modelling techniques is clear.

Traditional risk modelling depends on historic data to help firms prepare for the future. Yet the truth is that past performance is not a guarantee of future results.

Strategies driven by historic data may fail to accurately represent future market dynamics. It’s the difference between watching a film about flying a plane versus learning to fly a plane using a dynamic flight simulator. The simulator captures how the plane will respond to the pilot’s commands under any number of plausible scenarios, such as heavy turbulence, malfunctions, and even a black swan event.

Within electronically traded markets, traders respond to each other’s activity and adjust their actions – and their algorithms – accordingly. Just like the game of poker, participants adapt their trading strategies to the stream of events coming at them.

Chloe Hibbert