Risk Management Frameworks for Professional Forex Traders

 Risk management defines survival in forex. Without it, even profitable strategies eventually fail.

1. Position Sizing

Institutions use mathematical models like the Kelly Criterion to determine optimal trade size.

2. Portfolio Diversification

Balancing exposure across correlated pairs prevents systemic losses during volatility spikes.

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3. Capital Preservation

Risk per trade should rarely exceed 1–2% of total equity, maintaining psychological and financial stability.

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