👉Stop-loss and take-profit orders
Stop-loss orders allow traders to limit losses when a trade goes wrong. Take-profit orders ensure that they lock in profits when a trade goes well. Ideally, stop-loss and take-profit prices should be defined before entering a position, and the orders should be set as soon as the trade is open.

Knowing when to cut losses is essential, especially in a volatile market where prices can tumble rapidly. Planning your exit strategy also prevents poor decision-making from emotional trading. The stop-loss and take-profit levels are also essential for calculating the risk-reward ratio of each trade.

👉Hedging
Hedging is another strategy traders and investors use to mitigate financial risk. It consists of taking two positions that offset each other. Simply put, traders can hedge one trade by making an opposing trade of similar or equal size. 

It may seem counterintuitive to enter positions in opposite directions, but if done properly, hedging can reduce the impacts of a marke…