Discussing the article: "Risk Management (Part 1): Fundamentals for Building a Risk Management Class"

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Check out the new article: Risk Management (Part 1): Fundamentals for Building a Risk Management Class.

In this article, we'll cover the basics of risk management in trading and learn how to create your first functions for calculating the appropriate lot size for a trade, as well as a stop-loss. Additionally, we will go into detail about how these features work, explaining each step. Our goal is to provide a clear understanding of how to apply these concepts in automated trading. Finally, we will put everything into practice by creating a simple script with an include file.

Risk management is a fundamental pillar of any trading strategy. Its main purpose is to monitor and control open positions, ensuring that losses do not exceed the limits established by the trader, such as daily, weekly, or overall losses.

In addition, risk management determines the appropriate lot size for each trade, based on the user's rules and preferences. This not only protects capital but also optimizes the strategy performance, ensuring that trades align with the defined risk profile.

In short, good risk management not only reduces the chances of catastrophic losses but also provides a disciplined framework for making intelligent financial decisions.

Author: Niquel Mendoza