Risk tolerance – This is the trader’s willingness to accept risk and drawdown. A conservative trader or robot has low risk tolerance, meaning tight stops and small position sizes; an aggressive one has high risk tolerance. In trading psychology, understanding your own risk tolerance is key to avoiding emotional mistakes. In a bot, RiskTolerance can be a configurable parameter that sets maximum allowed losses or volatility exposure. Matching a bot’s risk settings to the trader’s true tolerance helps prevent emotional overreach (for example, a bot that stays within a 2% per-trade loss limit versus one that disregards it). As Investopedia suggests, a strong plan and matching risk tolerance can limit destructive behaviors like regret avoidance.

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