❗ Why Risk Management Matters

“Amateurs focus on profits. Professionals focus on protection.”

In Forex trading, risk management is everything. It ensures you survive losses and stay consistent over time.

Even the best strategy fails without solid risk rules.

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🛑 1. Stop Loss (SL)

A Stop Loss is a preset level where your trade will automatically close to limit losses.

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✅ Why Use It?

• Protects your account from big losses

• Removes emotion from trading decisions

• Keeps your losses small and manageable

📌 Example:
If you buy EUR/USD at 1.1000 and set a Stop Loss at 1.0970, your max loss = 30 pips

📏 2. Position Sizing

Position sizing determines how much you risk per trade.

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💡 Golden Rule:

Never risk more than 1–2% of your account on a single trade

💰 Formula:

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Risk = Account Balance × Risk % Lot Size = (Risk in $) ÷ (Stop Loss in pips × Pip value)

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📌 Example:

• Account: $1,000

• Risk: 2% = $20

• Stop Loss = 50 pips

• Pip Value (mini lot) = $1
  → Trade size = 0.4 lots

Use a Position Size Calculator to do this easily.

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✅ Pro Risk Tips

• Always use a Stop Loss — never “hope and pray”

• Risk small, especially if you're learning

• Increase size only after you’re consistently profitable

• Journal every trade to spot mistakes and adjust

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🔒 Key Tools:

• 🧮 Position Size Calculator (online or app)

• 📉 Risk-to-Reward Ratio (Aim for 1:2 or better)

• ✅ Trading Plan (with fixed SL rules)

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🧠 Remember:

“A good trader is not someone who always wins, but someone who never loses big.”