Risk management helps you determine the framework you will use to make money. A key concept is to make sure you cut your losses and let your profits run. You need to break down your risk management at a portfolio level, a strategy level, and the trade level. Be realistic in terms of the amount you are attempting to gain relative to the risk that you assume. Additionally, while market risk is the most likely risk you will encounter, you will also be exposed to credit risks, operational risks, and systematic risks. For traders to be successful, it’s essential that they have realistic currency risk management strategies in place.
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