<h2>Market Risk</h2>
<p>Market risk, also known as price risk, is a type of risk that arises from changes in market conditions. It is a fundamental concept in finance and trading, affecting all participants, from individual traders to large institutions.</p>

<h2>How It Works</h2>
<p>Market risk occurs when the price of an asset moves against a trader's position. This can happen due to various factors, such as:</p>
<ul>
  <li>Economic indicators and news events</li>
  <li>Supply and demand dynamics</li>
  <li>Market sentiment and speculation</li>
  <li>Geopolitical events</li>
</ul>
<p>Market risk can be quantified using measures like <strong>value at risk (VaR)</strong> and <strong>conditional value at risk (CVaR)</strong>, which estimate potential losses under normal and stressed market conditions.</p>

<h2>Why It Matters for Traders</h2>
<p>Market risk is a significant concern for traders as it can lead to substantial losses. Here's why it matters:</p>
<ul>
  <li><strong>Position sizing</strong>: Understanding market risk helps traders determine the appropriate size of their positions, ensuring they don't expose themselves to excessive losses.</li>
  <li><strong>Risk management</strong>: Monitoring market risk enables traders to set stop-loss orders, close positions, or adjust their portfolios to limit potential losses.</li>
  <li><strong>Diversification</strong>: By spreading investments across various assets and sectors, traders can reduce their exposure to market risk.</li>
</ul>

<h2>Example</h2>
<p>Consider a trader using <strong>MetaTrader 5</strong> who buys EUR/USD at 1.2000 with a leverage of 1:300. If the market moves against the trader, and EUR/USD falls to 1.1900, the trader's account would incur a loss of $100 for every $10,000 notional value traded.</p>

<h2>Key Takeaways</h2>
<ul>
  <li>Market risk is an inherent part of trading and investing.</li>
  <li>It arises from changes in market conditions and can be quantified using measures like VaR and CVaR.</li>
  <li>Understanding and managing market risk is crucial for traders to protect their capital and make informed decisions.</li>
</ul>