What are the factors affecting risk?

You can reduce risks by trading with stop losses or with a small leverage. It is also better to calculate the lot size according to the rules of money management and in accordance with the size of your deposit. The risk can also be associated with the dishonesty of the brokerage company, which will have large spreads, frequent slippage, delays in opening and closing orders, freezing of the trading platform. To exclude this, I chose fxopen for trading, where these negative aspects are not observed.

 

High leverage and high frequency of trades without solid trading strategy

 

Risks in trading are also associated with the inexperience of traders and the inability to control their emotions.

 

By far the highest risk factor to the trading account equity is the trader himself.

 

Buying high and selling low is risky.
Too much leverage is risky.
Countertrend is risky.
Whisky is risky.

GPT would say

Leverage: Borrowing money to trade can amplify both gains and losses, leading to higher risks.

Market Volatility: Highly volatile markets, where prices fluctuate dramatically, can lead to unpredictable outcomes and higher risks.

Lack of Diversification: Concentrating investments in a single asset or sector increases exposure to risks associated with that specific area.

Emotional Decision-Making: Trading based on fear, greed, or impatience can lead to poor decisions, increasing risk.

Inadequate Research: Insufficient knowledge or lack of proper analysis on market trends, economic indicators, or company fundamentals can lead to uninformed decisions.

Overtrading: Excessive trading, driven by the desire to capitalize on every small price movement, can increase transaction costs and risk of mistakes.

Illiquid Markets: Trading in markets with low liquidity can make it harder to execute trades at desired prices, leading to higher risks.

Political and Economic Events: Global events, such as elections, wars, or regulatory changes, can introduce sudden uncertainty, increasing market risk.

Uncontrolled Position Sizes: Taking overly large positions relative to your account size can increase the likelihood of significant losses.

High-Frequency Trading (HFT): Short-term, algorithmic trading strategies carry the risk of technical failures or sudden market shifts

 

Some traders try to trade on important news, which is also a risky trade when the price can suddenly go anywhere and provide an impressive loss.