Risk management is also known as money management, refers to a number of trading techniques employed to lessen risk being affected by various factor currency rates may be quite volatile at times does protecting your account against advisor price fluctuation is an is on tile part of our trading strategy. The core concept of money management is to avoid drinking more than 1 to 2% of personal funds on any single read this principle may greatly reduce risk exposure provided that only 1% of initial deposit is at risk even after server lossing trade you are likely to retain the majority of account balance. Risk to reward ratio denotes the potential profit in in comparison to the amount you may loss for any given trade for example when you risk hundred USD on position to potentially gain $300 the risk to reward ratio is 1:3. Ratio of 1:2 is considered the minimum one should I am for only a third of position would need to be profitable to remain break-even. Potential profit and loss can be defined through stop loss and take profit levels. Stop loss and take profit are orders to close the position when price reaches a certain defined level stop loss or take profit level can be identified with various technical analysis tools: 1) support and resistance for short position stop loss is usually place just above resistance level while a long position often has stop loss set a little below spot level. 2) trend lines and channels stop-loss prices commonly place outside the channel above or below the trend line. It is important to note that the price of each pipe depends on the trading tool and the value of your position trailing stop can be used to adjust of Lost level automatically whenever the price moves in a favourable direction along with reducing the risk it may also event Li lock in the profit already gained. Keep in mind however that neither stop loss not a profit is granted when the market is volatile or during a price graph your order may be executed at a different price than expected. Thanks
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