"If you have an approach that makes money, then money management can make the difference between success and failure...I try to be conservative in my risk management. I want to make sure I'll be around to play tomorrow. Risk control is essential." - Monroe Trout, Trout Trading
Controlling risk while trading takes many forms. It starts with properly selecting which markets to trade, then moves on to decisions about allocating capital and taking appropriate-sized positions. But managing risk and limiting losses also is accomplished through understanding risk itself as well as human nature. Any trader’s chance for success improves with a disciplined use and understanding of money management techniques.
What you need to know about risk management