In amassing odds in the favor of a bettor, it is certainly significant to draw the line in sand that will be the cut out if market trades go to this level. Now, the difference between such cut-out point as well as where you may enter this market pertaining the Forex Trading Risk. Psychologically, you should also accept the risk upfront prior that you may even take a trade. When you accept the possible loss, and if you are OK, so you may also consider forex trade further. When the loss would be quite much for you to usually bear, so you should also not take trade or otherwise you would be stressed severely and also unable to be a key objective of the trade proceeds.
As risk is known to be opposite side of coin for reward, you must draw the second line in sand, that is where, if market also trades to the specific point, you would also move the original cut-out line for securing your position. It is known to be the sliding for your stops. It is the second line which is a price on which you might break even if market cuts down to that point. When you are well protected by the break-even stop, the risk usually has been decreased to zero, till the time market is quite liquid and you also know the trade will get executed at the price. Ensure that you understand key difference between the stop orders, market orders and limit orders. You may check the Online Trading Review to get a better idea.
The other risk factor is liquidity which means that there are adequate number of the buyers and also the sellers at latest prices for effectively taking the trade. In forex markets, the liquidity is not a problem. It is known as the market liquidity, and in forex market of spot cash, it accounts for about $2 trillion for each day in the trading volume.