Risk management is the art of reducing risk in trades. For example, some people put their stop losses at 2% below the purchase price. It assures that you lose only a set amount of money on each trade.
To mitigate risk, traders diversify their portfolio. Most of the commodities are interlinked, such as if the price of crude oil goes up there is a chance that the price of agricultural products such as wheat and sugar will also rise. This is because the transportation cost will rise, which will reflect on the end product. Some commodities have very little correlation such as Natural Gas and gold.
To protect against the fall in a sector, it is important that we invest in different sectors that have very low correlation to each other.
Another important principle is to decide when to take profit. If we do not decide on a set profit then we will get greedy and expect the price to rise higher, but it is almost certain that the price will fall again taking our chances of profit with it.
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