Lesson 4.2 - Risk Control Basics¶
Risk control in the Dealing Room is not only about preventing losses. It is about keeping risk visible, understood and handled through the correct authority path.
Dealers are not expected to make every risk decision independently. They are expected to notice risk early, verify it properly and escalate it clearly.
After this lesson, you should be able to:
- Understand the main risk areas a Dealer must monitor.
- Recognize the difference between a warning sign and an approved action.
- Know when a situation should be escalated.
- Record risk observations in a way that can be reviewed later.
Core Risk Areas¶
| Area | What to Watch | Typical Dealer Action |
|---|---|---|
| Exposure | Large net or gross exposure, one-sided build-up | Monitor, compare risk status, escalate if concentration increases |
| Quote / pricing condition | Weaker quote-source participation, wider spread, unstable pricing | Increase monitoring and check order conditions |
| Execution | Rejects, delays, unusual slippage | Verify scope and collect examples |
| Platform | Quote gaps, bridge queue, server alerts | Confirm with system evidence and notify Shift Leader / follow-up |
| Client flow | Repeated high-risk patterns or concentrated activity | Record facts and request review through the correct channel |
| Handover | Unresolved incidents or unclear ownership | Clarify Shift Leader / follow-up before the shift continues |
Warning Sign vs Action¶
An alert does not automatically mean a Dealer should change settings, reject orders or adjust routing. An alert means the situation needs attention.
| If You See | First Response |
|---|---|
| Exposure alert | Check symbol, direction, account concentration and market conditions |
| quote source latency increase | Compare other quote sources and check whether execution is affected |
| Repeated platform rejects | Confirm whether the issue is symbol-specific, account-rule related or platform-wide |
| Large news event approaching | Review exposure, Quote source status and monitoring priority |
Operational actions must follow authority rules. When unsure, escalate with evidence instead of acting outside permission.
Escalation Standard¶
Escalate when one or more of the following is true:
- Client execution is materially affected.
- Exposure becomes concentrated or difficult to manage.
- A system issue persists or spreads.
- The same behavior repeats across accounts or time windows.
- The decision requires permission beyond your authority level.
Good escalation includes:
- Time window
- Symbol
- Account or account group if relevant
- What changed
- Evidence checked
- Current impact
- Recommended next Shift Leader / follow-up
Example¶
An XAUUSD exposure alert appears before a major data release. The alert itself is not the final problem. The Dealer should check whether exposure is concentrated, whether Quote source status is stable and whether execution quality is changing.
If the risk remains normal, record and continue monitoring. If concentration increases or execution conditions deteriorate, escalate to the responsible risk lead.
Key Takeaway¶
Risk control is a workflow: observe, verify, record and escalate. Dealers keep risk visible; authority rules decide who can take which action.
Completion Criteria¶
- Can explain the key risk or operational objective of this lesson
- Can identify the required systems, data, or evidence to review
- Can describe the correct escalation or handling process
- Has completed Shift Leader / follow-up review or practical confirmation