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Trading Terms

Pessimistic Rate of Return

As a knowledgeable professor in finance, allow me to introduce you to a useful measure called the Ulcer Index. This statistic takes into account the worst return from trading results, by adjusting the number of wins and losses based on their square root. This results in a more accurate estimation of the potential risk of an investment. By multiplying these adjusted numbers with the average win or loss, we can determine the overall risk of the required investment.

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