TRADING GLOSSARY
Tail risk
Tail risk is exposure to unusually extreme outcomes located at the edges, or tails, of a return distribution. In risk management, it usually refers to rare, severe losses that may be underestimated by models based on typical market conditions.
EXAMPLE
In a hypothetical currency shock, prices gap sharply beyond recent trading ranges, producing a loss much larger than the trader’s usual daily fluctuations.
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Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Glossary definitions are general education only and are not investment advice. Risk disclosure