How Much Should You Risk Per Trade? The 1% Rule Explained

The single question that separates traders who survive from traders who blow up. Learn the pro answer to how much of your account you should risk on any single trade.

The Short Answer

Most professional discretionary traders risk 0.5% to 2% of account equity per trade. Beginners should stay at 0.5% to 1% until they are consistently profitable over 100+ trades.

Why 1%? The Math of Ruin

Risking 1% means a string of 10 consecutive losses only takes you to a 10% drawdown. Risking 5%? The same losing streak wipes out 40%. And 40% requires a 67% gain just to break even.

See the asymmetric math for yourself in the Drawdown Recovery Calculator.

Concrete Example

Account: $10,000. Risk 1% = $100. Entry $100, stop $98 (2 points of risk). Position size = $100 / $2 = 50 shares. Even if this trade fails, you still have 99% of your capital to work with tomorrow.

Plug your own numbers into the Position Size Calculator.

When You Can (Carefully) Go Higher

Established edge: 100+ trade sample with proven expectancy.
Small % of net worth: if the account is 5% of your net worth, 2% per trade is 0.1% of net worth.
Uncorrelated positions only: if you already hold 3 tech longs, don't add a 4th at 2% risk each — total risk is now 8%.

Common Mistakes

Sizing by feel — "this one is a slam dunk" is where blow-ups begin.
Doubling down after losses (Martingale) — mathematically guaranteed to blow up eventually.
Ignoring correlation — five 1% positions in the same sector = one 5% position.
Sizing by leverage instead of by risk — leverage is fuel, risk % is the road.