Risk management is a systematic approach to identifying, assessing, and mitigating potential financial losses in trading and investment activities. It involves setting clear boundaries for capital allocation, using stop-loss orders, diversifying portfolios, and avoiding over-leveraging. Effective risk management helps traders preserve capital during market downturns and ensures long-term sustainability. It also includes evaluating the risk-reward ratio of each trade and maintaining emotional discipline to prevent impulsive decisions. By implementing consistent risk protocols, traders can enhance their chances of success regardless of market conditions. This practice is essential for both beginners and experienced investors seeking to protect their investments and achieve steady growth over time.