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5 Tips for Managing Risk in Forex Trading
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• There is no reward without risks. Especially,
  when it comes to forex trading, the forex market
  is highly volatile and risky in nature. Despite
  the high probabilities for making huge profits,
  the market comes with the risk factor attached. A
  trader should know how to efficiently tackle the
  risks in order to make profits consistently. This
  is where forex education plays a key role. Risk
  management is one of the crucial topics in forex
  education. Without knowing how to manage risks,
  it is impossible for the trader to sustain in the
  trade world. 
•  
• Before you start to trade, draw a risk management
  plan to safeguard your investments. Therefore,
  even if you lose the trade, you will have a
  backup plan to avoid financial devastation. So,
  what are the risks in forex trading? 

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• Price fluctuations of currency pairs - This will
  make a trade difficult as the price may either go
  deep down or skyrocket to a top high  
• Low liquidity in the forex market - Forex market
  is usually a high liquidity market but at times
  low liquidity can happen, where the trader cannot
  immediately sell or buy an asset to avoid loss
• Increase or decrease in interest rates - At
  times, the interest rates may either increase or
  decrease in the forex market, affecting the
  volatility. 
• Impact of trading using leverage - When a trader
  trades using leverage, there are chances for him
  to forget the total amount that is at risk, as
  the investing amount is small. This can magnify
  both profits and losses.
•  
• Now that you are aware of some of the major risk
  types in forex trading,
• let us now see how to smartly manage these risks.

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5 Tips to Manage Risks in Forex Trading

• Here are 5 practical tips or techniques to manage
  risks in forex trading.
• Start trading with a demo account
• If you are trading for the first time, open a
  demo account and practice trade techniques using
  virtual money. Demo trade account is no different
  from a real trade account in any manner. You
  won't be investing real money in a demo account.
  This will help you learn diverse trade techniques
  without the fear of losing any real money. There
  are no risks when you trade using a demo account.
  After continuous practices, once you are
  confident about your trade skills, you can open a
  real trade account with a suitable forex broker.
  Most brokers offer demo trade accounts to
  beginner traders.  

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• 2. Devise a trade plan 
•  
• Every trader should know the importance of a
  trade plan. Before beginning a trade, a trader
  should sort out his trading needs and goals, and
  formulate a relevant trade plan to achieve the
  goal. Having a trade plan will help the trader
  trade in an organized manner. A trade plan will
  help the trader act in a disciplined way. Traders
  can also keep a personal trade book to note down
  the results of each trade. 
• 3. Follow stop-loss limit orders
•  
• Traders should have a firm decision about their
  entry and exit positions before they begin a
  trade. This can be facilitated by setting
  stop-loss orders and trade limits. Limit orders
  will automatically close the trade when the price
  reaches a specific level. This specific level
  will be chosen by the trader. Therefore, when the
  prices go down, the trader can prevent losses by
  following risk management techniques such as stop
  loss and limit orders. 

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• 4. Use leverage smartly  
• Leverage is one of the beneficial and popularly
  used trading techniques among traders. When a
  trader trades using leverage, he will borrow a
  major amount of money from the broker, and invest
  only a small amount of his own in the trade. This
  will help him engage in large volumes of trade.
  But leverage can magnify both profits and losses.
  If you gain profitable returns, you will have
  made more money. And, if you have lost, you will
  be in a huge debt, as you owe the broker the
  borrowed money. Therefore, the trader should
  analyse the market and use leverage in a smart
  manner to get the benefits out of it. 
• 5. Avoid acting emotionally 
• Managing emotions while trading can be
  challenging for new traders. A success can
  trigger the trader to make more investments and
  end up in huge losses. Therefore, stick to your
  trade plan no matter what you gain. Indulge in
  market analysis, follow the new trends, and make
  your investment decisions accordingly. Do not let
  your emotions influence your trade decisions. 

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• Understand the nature of the forex market, be
  thorough in important trade concepts and follow
  the market trends regularly to stay updated about
  whats going on in the forex market. Get familiar
  with useful technical indicators, charts and
  tools to analyse the price movements and make
  trades accordingly.

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