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Risk vs. Reward - In the Markets and on the Water

Don Wilson, Founder and CEO of DRW, defines risk vs. reward - in the markets and on the water.

I've always seen clear parallels between competitive sailing (a passion of mine) and trading in the financial markets - it all goes back to the age-old question of risk versus reward. Every decision in sailing - like every position we take in the markets - requires a sharp focus on risk management. Does a sailor tack to cover his opponent or risk splitting for greater leverage with potentially greater gains and losses? How risky is a move in one direction if the wind doesn't shift to his advantage? It's a constant challenge for each sailing team to ensure the right balance.

Just as the futures markets have become more technologically advanced with the move from open outcry to electronic platforms, competitive sailing has experienced a similar evolution. At the highest level of the sport (such as in the America's Cup), teams of engineers and technologists analyze, build and deploy sophisticated hardware and software before, during and after a race. Hundreds of gigabytes of raw data, powerful databases and algorithms all come together to help the sailors capture opportunities on the water, just as we deploy leading edge technology to capture market opportunities.

When I founded the Chicago Match Race Center in 2009, it was with the mission of bringing world-class match racing to the shores of Lake Michigan. We'll see that come to life when the international sailing world turns its attention to Chicago for the Louis Vuitton America's Cup World Series June 10-12. As a Chicagoan and a sailor, I hope this is only the first step in creating a foundation for stadium sailing in Chicago, building a legacy of community interest in the sport and, ultimately, bringing the main America's Cup event to the city.

I'd like to recognize CME Group, which has joined as a Foundation Partner for the Louis Vuitton America's Cup World Series. Businesses around the world rely on CME Group exchanges in managing their risk, a natural alignment with the risk versus reward nature of competitive sailing. Bringing an event like this to Chicago wouldn't be possible without partners like CME Group, and I'm grateful for their support.

If you enjoy competitive sailing, you already know how great this event will be. If you're new to the sport, I hope you will consider taking in this historic, first-ever freshwater America's Cup event - the atmosphere, strategy and speed won't disappoint.

For more information (and more incredible videos of the course) visit the America's Cup website.

This originally appeared in the John Lothian Newsletter on March 2, 2016.

Learn more about Don Wilson's career in competitive sailing: