As we know market involved many risks which causes loss of capital and ultimately cause to de- motivation. Understanding them is crucial for anyone considering entering the financial markets.

1.Market Risk: This is the risk of losses due to change in market prices. Market risk can arise from factors such as economic events, geopolitical events, interest rate changes and company- specific news.

2.Liquidity Risks: Liquidity risks refer to the difficulty of buying and selling as assets without causing a significant change in its price. Liquid assets may have wide bid –asks spread can be harder to trade without impacting the market.

3.Volatility Risk: Volatility measures the degree of variation in the price of financial instruments over time. Higher volatility increases the potential for large price swings, leading to both higher volatility increases the potential for large price swings, leading to both higher potential profit and losses.

4.Leverage Risk: Trading with leverage amplifies both potential gain and losses. While leverages can magnify profits in favourable market conditions, it also increases the risk of substantial losses if the market moves against the traders.

5.Counterparty Risk: This Risk arises when one party in a trade fails to fulfil its obligation. For example, in over the counter derivatives trading, counterparty risk refers to the risk refers to the risks of default by the other party.

6.Regulatory Risk: changes in regulations, policies or laws governing financial markets can impacts trading activities. Regulatory changes may affect trading strategies, increases compliance costs or restrict access to certain market or instruments.

7.Operational Risk: operational risk include failures in trading platforms, errors in trade execution, cyber security threats, and the other operational issues that can be disrupts trading activities and lead to financial losses.

Managing and mitigating theses risky typically involves through research, risk management strategies such as setting stop loss orders, diversification of investments and maintaining a disciplined approach to trading.

It is important to understand that all the traders have exposure to risk; there is no way to avoid it completely. However, if you know how to manage it correctly, your trading strategy can be more efficient.

How to manage risk in trading ?

There are many ways that can be used to manage risk in trading. we are going to talk about five in particular.

• Use stop loss and take profit : As we mentioned earlier, the stop loss is the automatic limit that can be set on the amount of money you can afford to loss on a trade, this type of order minimize losses and keeps risk to a minimum. Similarly, an order known as take profit can be established, in which, according to the positive price expectation of a financial instrument , the limit at which the operation must be stopped in order to obtain profits can be established.
• Diversify your investment : Start investing on a different asset in this way you will not loss your money in one go, it will balance your portfolio if some assets price will go down, other assets will balance your amount, and thus generating balance at the same time reducing the risk of losses.
• Use proper lot size : This rule works to establish the amount that can be used to perform the trading. According the capital size the amount of lot size should be used will be very less like 0.01 or 0.02 or maximum 0.20. This will maintain your trading strategy of smart money concept and will help you to make good amount of profit apart from high fluctuation in the market.
• Final thought : Managing risk on daily is vital because possibility of loss is more than winning one, many people are entering in this market apart from getting all knowledge very less are getting fixed ratio on manual trading, the most important thing is it is very large financial market so the accurate prediction is yet very difficult all the time, so nowadays many companies are developing the AI bots which manage your risk and reward ratio while trading.

www.aiprofithunter.com will give you fixed profit at the end of every month, we also customised bot according to your available capital. This is not the discussion of one page it will take yours as well as our experience.