Confidence Interval Mapping

Confidence interval mapping is a technique used to determine the range in which a future value or loss is expected to fall with a certain level of probability. For instance, saying there is a 95 percent confidence that a portfolio loss will not exceed a certain amount.

This helps traders understand the potential for bad outcomes. In the volatile world of crypto, mapping these intervals is crucial for setting appropriate risk limits.

It gives a statistical way to quantify risk, moving beyond intuition to concrete numerical measures. It allows risk managers to communicate potential exposures clearly to stakeholders and ensure that capital is managed with discipline.