Risk management is the most important aspect of any trading plan. Apart from the mathematical and strategic methodologies to employ, there are several precautions you can adopt as a trader and consider in your decision-making process.
- Never risk more than you can afford to lose.
- Never forget Rule no.1.
- Stick to your trading plan.
- Consider the costs like spread, rollover/swap and commissions.
- Limit your margin use and track available margin to avoid margin calls.
- Always use Take Profit and Stop Loss orders.
- Never leave open positions unattended.
- Record your performance and adjust as you progress.
- Avoid high volatility periods like economic news releases.
- Avoid making emotional decisions when trading.