Risk management has made me huge profits over the years, I didn't profit because I created the best system, or a great trading robot. I did it by using several principals that are the foundation of my trading.
1. Never risk too much on any trade no matter how great the trade looks. I usually risk 2%-4% and try to make anywhere from 5% to 10% and over depending on the way I'm trading. Since I always have at least 2 broker accounts opened at any point in time, I add up my balances and call this my trading fund, so when I trade I calculate my risk based on my whole trading fund not just the particular broker I'm using for the trade.
If you're risking more than 10% you're headed for disaster, no matter the size of your account, percentages should stay the same, maybe get slightly lower as your account increases!
2. Withdraw profits from your account every week, or at least put your profits in a separate account and then withdraw in the end of the month. There are costs involved with withdrawing I know, and you want to use the profits to increase your position size, but in the long term promptly withdrawing profits will prove to be one of the best things you did for your trading style
Also withdrawing money frequently and keeping that hard earned cash in a bank account can protect you in the event your broker goes under.
When you're ready to increase your lot size, deposit new funds. Knowing that you're making money and seeing it in your account makes a huge difference.
3. Keep a trading journal, this might not be risk management exactly but once you put your trader in a spreadsheet, you start seeing patterns over time, believe me this will improve your trading tremendously. I learned to do this after reading a book by Alexander Elder, can't remember the name, but it was about trading stocks mostly.
What I put in my trading journal - the date/time the trade was made, reason, profit/loss, notes, lessons learned.
4. Open accounts with a few brokers. Forex is not like stocks, where there is one central market, there are many markets, usually you're trading against your broker, sometimes they hedge your trades sometimes they don't. Imagine you're trading and you open a position, all of a sudden your platform dies on you, well you have a few accounts so you can hedge the trade on another platform until the problem is resolved. You're trading in a more volatile time, and your broker increases the spreads too much, your other broker might offer better spreads, ultimately saving you a few pips. Over the span of a year a few pips here and there can add to hundreds. Think about it! Always have a plan B
5. Never add to losing positions. This is the hardest one, I added to a loser myself just today, I added to a losing position...oh man was this day stressful, I knew it was wrong the second I pressed the button. I did make a profit but man was I stressed out. If a position is going against you, you might see it as a buying opportunity, but as you keep adding to the position your risk increases. Dennis Gartman(a popular market guru, he publishes the Gartman letter) always preaches adding only to winning positions.
Think about it, it makes sense, but it sure is a tough advice to follow!
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