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Effective risk management is a key factor in successful FX trading. Risking less than 1% of your account in every trade gives you a sizeable amount to trade and at the same time minimizes you risk in that you could still somehow be able to recover your losses in case the trade doesn't go your way. Also, being cautious about over-trading keeps your market perspective in check because it prevents you from "revenge trading" or trying to catch up with the market especially after you've lost a trade.
