Risk and money management deals with a question every trader has to answer before entering the market: how much can be lost on a single trade, and how much capital should be committed to it? Analysis helps to decide what to trade and when. Risk and money management determine how much is at stake – and therefore whether a series of losing trades remains a normal setback or becomes a threat to the entire account.
The terms in this section cover the most important building blocks. They explain how to assess a trade in advance with the risk-reward ratio, how margin and leverage affect the capital required, and how money management sets limits for each position. Other entries deal with protecting open trades – from hedging a position to hedging entire portfolios – as well as paper profits and losses, break-even, profit-taking and drawdowns.
The overview does not claim to be complete, but it covers the concepts that matter most in practice – especially in leveraged forex and CFD trading, where losses can add up quickly.