Risk 5 min read
The 1% risk rule: how much should you risk per trade?
The 1% risk rule says you should never lose more than 1% of your account on one trade. It sounds small, but it's the reason professional traders survive losing streaks.
Why 1% works
Losing streaks are normal. Even a 60% win-rate strategy will regularly lose 5 or 6 in a row. At 1% risk, six losses is about −6%. At 5% risk it's about −26%, and you need +35% just to get back to even.
How to apply it
- Account $10,000 × 1% = $100 maximum loss on this trade.
- Place your stop where the trade idea is wrong (from the chart, not from the money).
- Lots = $100 ÷ (stop distance × $ value per point per lot).
- If the lot size is too small to be worth it, the trade is too wide for your account. Skip it.
When to go lower
Many traders drop to 0.5% after a losing week or on news days, and on prop firm accounts with tight daily drawdowns.
Questions traders ask
What is the 1% rule in trading?
Risking no more than 1% of your account balance on any single trade, by sizing your position from your stop loss.
Is 2% risk per trade too much?
2% is often seen as the upper limit for day traders. It roughly doubles drawdowns compared with 1%.