Risk Management Frameworks for Professional Forex Traders
Risk management defines survival in forex. Without it, even profitable strategies eventually fail.
1. Position Sizing
Institutions use mathematical models like the Kelly Criterion to determine optimal trade size.
2. Portfolio Diversification
Balancing exposure across correlated pairs prevents systemic losses during volatility spikes.
3. Capital Preservation
Risk per trade should rarely exceed 1–2% of total equity, maintaining psychological and financial stability.
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