Two or more parties exchange products or services through trading. If you need gasoline for your car, you would trade dollars for it. Bartering used to be the main form of trading, where one commodity was exchanged for another, and it is still practiced in some societies today.
In exchange for a basket of apples from Person Y's tree, for instance, Person X will fix Person Y's broken window. In this example, risk management is relatively simple in a day-to-day trade with a practical, easy-to-manage backdrop. Before fixing the window, Person X could ask Person Y to show him the apples to be sure they are safe to eat. Trading has been a practical, deliberate human activity for millennia.

Risk rules and strategy in trading are essential to protect capital and ensure long-term success. Key risk management rules include setting stop-loss orders to limit potential losses, diversifying investments to spread risk, and avoiding over-leveraging, which can amplify losses. Traders should also define their risk tolerance and never invest more than they can afford to lose. A well-defined trading strategy involves setting clear entry and exit points, adhering to a disciplined approach, and avoiding emotional decision-making. Additionally, using position sizing to control exposure and regularly reviewing performance helps refine strategies. Risk management tools like hedging and trailing stops can further mitigate risks. By combining these rules with a consistent strategy, traders can minimize losses, maximize gains, and maintain stability in volatile markets.