In forex trading, making a profit is important, but keeping your capital safe is even more critical. Risk management is the foundation of sustainable trading.
It starts with position sizing — never risk more than a small percentage of your capital on a single trade. This approach ensures that even a series of losses won’t wipe out your account.
Stop-loss orders are another essential tool, helping to limit downside risk without constant monitoring. Diversification, not just across currency pairs but also across asset classes, reduces exposure to market volatility.
Many traders overlook psychological risk — fear and greed can push you into making irrational decisions.
By sticking to a well-defined plan and controlling emotional impulses, you protect your portfolio and increase the odds of steady returns. Ultimately, traders who master risk management are the ones who survive and thrive in the long run.
