Risk Tolerance

Definition - What does Risk Tolerance mean?

Risk tolerance is a measure of how much volatility, uncertainty and potential loss a trader can stomach. Although it is broadly influenced by age and other socio-economic factors, risk tolerance is an individual factor. A trader's risk tolerance dictates the type and size of trade he or she is comfortable with.

ForexDictionary explains Risk Tolerance

Large potential gains are what attract most people to the forex market, but risks are the trade off for those gains. Consequently, forex traders need to have a risk tolerance than someone investing in a lower risk market.
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