The forex market is one of the most liquid and, yet, one of the most volatile financial markets in the world. That volatility, however, serves up plenty of profit opportunities for traders of all sorts—if they can manage the risk. Most forex traders understand that the leverage involved in trading currencies is a double-edged sword, with the potential to yield soaring profits as well as to inflict deep losses on trading accounts. But for many traders, understanding leverage on an intellectual level does not guarantee that they will avoid becoming emotionally unhinged when faced with the prospect of losing a significant amount of money. Diversification in the foreign exchange is a key method for reducing and eliminating the risks taken. Unlike other investment vehicles, a forex account can't be diversified by year, quarter, or month. However, you can still construct a diversified account by investing in various currency pairs, choosing different trading strategies, and making t...