Risk Management Basics: Trading Around Central Bank Events
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When a central bank like the ECB is expected to hike rates, volatility often spikes in the minutes surrounding the announcement. For beginners, this is exactly when solid risk management matters most.
Setting a stop-loss order caps your potential downside automatically, so a sudden price swing doesn't wipe out your account. Many new traders also reduce position size before scheduled news to limit exposure.
A widely used guideline is risking no more than 1-2% of your account on a single trade. This way, even a string of losses during unpredictable news events won't derail your overall trading plan.