#AITradingAffectsForex Applying proper risk management in AI-powered trading is crucial to protect capital and optimize returns. Here are key strategies to implement: 1. Position Sizing & Leverage Control Use the 1-2% Rule: Risk only 1-2% of your capital per trade. Adjust position size based on volatility and market conditions. Avoid excessive leverage—AI models can be wrong, and overleveraging increases losses. 2. Stop-Loss & Take-Profit Mechanisms Set stop-loss orders based on technical indicators (ATR, support levels). Use trailing stops to lock in profits while allowing trades to run. Take-profit levels should be risk-reward balanced (e.g., 1:2 or 1:3). 3. Diversification & Portfolio Hedging Trade across multiple asset classes (forex, stocks, crypto) to reduce correlation risk. Use AI to identify uncorrelated trades and hedge with safe-haven assets (gold, bonds). 4. Backtesting & Real-Time Monitoring Test AI strategies on historical data before deploying them live. Continuously monitor performance and adjust based on real-time market shifts. Use paper trading to refine risk parameters before risking real money. 5. Adaptive AI & Risk Alerts Implement AI models that adapt to changing market conditions. Set automated alerts for unusual volatility or deviation from expected strategy performance. Use sentiment analysis to assess potential news-driven risks.