There are a number of ways to do this. One way is to decide on a cut-off point on your trade before you execute it. Another way is to set a limit on how much downward pressure you're willing to tolerate on a trade. These two strategies are known as ‘stop loss' for obvious reasons.
The overriding point is to figure out a way that reasonably limits your risk on a trade, and to decide on a level of risk you're comfortable with. Once online trading Forex people set a stop loss, they should follow it religiously. Do not fall into temptation and widen your stop loss threshold as you trade.
While it is a good idea for online trading Forex people to reduce their lot sizes, it will not help lower your risk if you open too many smaller lots. It is also important to understand relationship between currency pairs. For example if you go short on EUR/USD and long on USD/CHF, you are exposed to risk twice.
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