Risk management is the foundation of long-term trading success. It defines how much capital you risk on a single trade and how you protect your account from large drawdowns.

Professional traders risk a small percentage of their capital per trade. This ensures that a series of losses does not wipe out the account. Stop-loss placement, risk–reward ratio, and position sizing are key components.

Without risk management, even a profitable strategy can fail. With proper risk control, even an average strategy can remain profitable over time.