How Much Should You Risk Per Trade? The 1% Rule
If you learn only one thing before you start trading, make it this. The traders who survive are not the ones with the best entries or the fanciest indicators — they are the ones who never let a single trade do serious damage. The tool for that is the 1% rule.
What the 1% rule means
The 1% rule says: never risk more than 1% of your account on a single trade. "Risk" here means the amount you would lose if your stop-loss is hit — not the size of your position. On a $1,000 account, 1% risk means you lose $10 if the trade goes wrong. That is it. The trade can use leverage, it can be large or small — what stays fixed is the $10 you are willing to lose if you are wrong.
Why 1% works: the math
Losing streaks are not bad luck — they are guaranteed. Even a good strategy that wins 50% of the time will, sooner or later, lose 5, 8, even 10 trades in a row. The only question is whether your account survives the streak.
- Risk 1% per trade and lose 10 in a row: you are down about 10%. Annoying, fully recoverable.
- Risk 10% per trade and lose 10 in a row: you are down about 65%. To get back to even you now need to make +186%.
That last point is the killer. Losses compound against you: a 50% loss needs a 100% gain to recover, and a 65% loss needs +186%. Risking small keeps you out of the hole that is mathematically almost impossible to climb out of. Surviving the losing streak is the whole game.
How to apply it
Three numbers turn the rule into an exact position size: your account size, your risk percent (1%), and your stop-loss distance. For example, on a $1,000 account risking 1% ($10), with a stop-loss 5% away from your entry, your position should be about $200 (because 5% of $200 is $10). You do not need to do this by hand — our position size calculator gives you the exact number in seconds. Just enter your account, your risk %, and where your stop goes.
1% vs 2%
1% is the safest starting point and what we recommend while you are learning. Some experienced traders use 2% once they have proven their strategy survives real volatility. Above 2%, the math starts working hard against you, and a normal losing streak can do lasting damage. When in doubt, stay at 1% — it is not timid, it is what keeps you trading next year.
Common mistakes
- Confusing position size with risk. A $200 position is not a $200 risk. Your risk is only what you lose if your stop is hit.
- Trading without a stop-loss. Without a stop, you cannot define your risk at all, so the 1% rule is meaningless. Always set one — see our take-profit / stop-loss calculator.
- Letting leverage tempt you into bigger risk. Leverage does not change the rule. Whether you use 2x or 20x, your risk per trade stays at 1%. Leverage only changes where your liquidation price sits.
