Careful planning must go into each and every position to effectively manage risk.
This includes coming up with a comfortable amount to risk, how much reward you are seeking for that risk, along with crucial levels and signals to watch for, such as support, resistance, or indicators.
Before entering a position performing technical analysis to map out any potential areas of support or resistance.
Knowing just how much to risk to achieve a particular reward, and knowing at which price point to take profit at to achieve the desired results, is a risk management strategy in and of itself.
By having a plan in advance, there is less chance for emotions getting in the way.
