Once you've identified the potential risks in your portfolio, there are numerous ways to mitigate them. Among the more common examples are:

Attaching stops and limits to trades to automatically close them out at specified levels
Hedging, or opening a position that is inverse to one that you already hold
Choosing trades with lower risk
Diversification, or spreading your trades across multiple asset classes

Lowering risk is essential for successful trading, especially in volatile markets like forex. One key strategy is diversification spreading investments across different assets or currency pairs to minimize losses from a single market movement. Setting stop-loss orders also helps limit potential losses by automatically closing trades when they hit a predetermined level. Position sizing is another critical approach; by only risking a small percentage (often 1-2%) of total capital per trade, traders can protect their portfolios against significant losses. Keeping emotions in check reduces impulsive decisions, and using leverage wisely prevents large, unintended exposures. Regularly reviewing and adjusting strategies based on performance analytics and market changes further strengthens risk management, helping traders stay aligned with their long-term goals.