Risk management is crucial in forex trading because it protects your capital from significant losses. Without proper risk controls, even a few bad trades can wipe out your account. Key practices include setting stop-loss orders, risking only 1–2% of your account per trade, and avoiding over-leveraging. These steps help you stay in the game long enough to succeed.


Emotional discipline is another aspect of risk management. Traders who ignore risk rules often chase losses or over-trade, leading to bigger drawdowns. A well-defined risk strategy ensures consistency and reduces stress, allowing you to focus on analysis and execution. Remember, preserving capital is more important than chasing profits.


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