Trading in the financial markets can be a lucrative activity, but it can also be a high-risk endeavor. Traders often face losses, and some even end up losing their entire investment. While there are many factors that can contribute to losses, there is one common cause that stands out above the rest: lack of risk management. What is Risk Management? Risk management is the process of identifying, assessing, and controlling risks that can affect a trader's investment. This includes understanding the potential risks associated with different assets, managing position sizes, setting stop-loss orders, and having a trading plan in place. The Consequences of Poor Risk Management Traders who do not practice effective risk management are at a much higher risk of losing their investment. This can happen for a number of reasons, including taking on too much risk, failing to cut losses quickly, and making emotional decisions based on fear or greed. One of the biggest consequences of poor r...
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