Trading according to your capital is essential for risk management in the forex trading industry. It involves adjusting position sizes and leverage based on the amount of capital available. Traders should avoid overexposing themselves by risking a significant portion of their capital on a single trade. Properly managing risk ensures that losses are manageable and allows for sustained trading over the long term. By trading within the limits of their capital, traders can protect themselves from excessive risk, preserve their trading accounts, and increase their chances of long-term profitability in the forex market.