Effective Forex Risk Management: Techniques to Protect Your Capital
Foreign exchange trading is high risk. Every trader needs a well-defined risk management strategy to achieve consistent and positive results.
There are two main methods for controlling risk. Depending on your trading strategy, you can use one, the other, or both.
- Money Management: This approach evaluates the impact of each trading position individually. It is the most common risk-control method for retail traders.
- Portfolio Management: This strategy enhances the risk-return profile by spreading investments across various currency pairs.
In the following chapters, we’ll introduce both concepts.
