How do traders manage risk?

Learn how stop losses, position sizing, and diversification help protect your trading account.

Risk management protects your capital. Common methods include:

  • Setting a stop-loss to limit how much you can lose.

  • Risking only a small part of your balance per trade (for example, 1–2%).

  • Diversifying across different stocks or sectors.

In short: Trade with a plan and protect your downside before chasing upside.

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