a. Define Your Risk Tolerance:
- Determine your risk tolerance level before entering any trade. This will guide your decisions on position sizing, stop-loss placement, and overall trading strategy.
b. Use Risk-Reward Ratios:
- Establish a risk-reward ratio for each trade (e.g., 1:2 or 1:3). This means that for every unit of risk, you aim to make two or three units of profit. Aim for higher ratios to ensure profitability over time.
c. Diversification:
- Avoid putting all your capital into a single trade or asset. Diversify your portfolio across different instruments to mitigate risk and reduce the impact of poor-performing trades.
d. Regularly Review and Adjust:
- Continuously review your trades and overall performance. Adjust your risk management strategies as needed based on your trading results and changing market conditions.
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