One of the foundational aspects of risk management is setting stop-loss and take-profit orders. A stop-loss order automatically closes a trade when the market moves against a trader's position by a certain amount, minimizing potential losses. Take-profit orders, on the other hand, close a trade when it reaches a predetermined profit level, locking in gains. By setting these levels before entering a trade, traders avoid emotional decision-making during volatile market conditions. 

Another key element is determining the position size for each trade. Traders often use the “2% rule,” which suggests risking no more than 2% of their total account balance on any single trade. By keeping risk per trade low, traders can withstand multiple consecutive losses without depleting their accounts. This approach helps maintain emotional stability, as traders are less likely to panic or make impulsive decisions when their risk is controlled. 

Leverage, while useful in amplifying profits, also increases risk. Traders must use leverage cautiously and ensure they understand its impact on their positions. Additionally, diversifying trades across different currency pairs and avoiding overexposure to any single market helps mitigate risk. 

A solid risk management plan, combined with a well-researched trading strategy, forms the backbone of successful forex trading. Traders who master risk management are more likely to achieve consistent results and avoid large, account-draining losses.