Risk management – the process of identifying, assessing and controlling your risks as you trade – is one of the most important factors in a successful and lucrative trading strategy.

Financial Markets Online co-founders, James Bentley and Samuel Fuller, are experienced, practicing traders who train students around the world. Today, they’re sharing with us 5 proven risk management strategies to keep your money safe.

1. Set your risk per trade – set a percentage or currency risk limit, that you’re prepared to risk on each trade. Most professional traders’ risk 1% or less of their account.
2. Avoid breaking rules and trading aggressively – Always adhere to the strategies that have been working for you and follow your own trading plan. Do not break the rules you set, even when things are on the downward turn – especially then, in fact. Trading aggressively and in haste will almost always result in losses.
3. Be realistic with your goals – understanding what your goals are and how you are going to achieve them is imperative to implementing a successful trading strategy. Overestimating your goals and what is actually possible will lead you to take uncalculated risks, in a desperate attempt to reach them.
4. Set a stop-loss – a stop-loss order is an order placed with a broker to sell a security when it reaches a certain price. Always know your total loss and gain before placing a trade, what you’re willing to risk, and sticking to it when the time comes.
5. Be focused and in a correct state of mind – keeping your emotions in check, remaining focused and in a correct state of mind is critical to maintaining your portfolio. If you’re finding yourself responding emotionally to a trading position, it’s time to stay disciplined and revisit the rules you’ve set yourself.