Liquidity risk is one of the most significant risks in forex trading, and it can have a severe impact on a trader's performance if not appropriately managed. One way to mitigate liquidity risk is through proper position sizing and leverage.

Position sizing is the process of determining the amount of capital to allocate to a specific trade. It's essential to keep in mind that the amount of capital allocated to a trade should not exceed what the trader can afford to lose. This is because trading is a speculative activity, and losses are a part of the game. A good rule of thumb is to never risk more than 2% of the trading account on a single trade.