Risk management

What is risk management?

Risk management involves risking a certain amount of total capital per trade. There is no specific formula or rule that can be rigidly applied. Instead, every trader has to determine over time what amount and position size they feel comfortable entering into a trade with. Risk management is variable and can be increased, for example, in good market phases with stable trends. The risk can be minimised by adjusting the position size in order to protect your own capital in difficult market phases or several consecutive negative trades. It is necessary to distinguish between individual position risk and overall risk.