Risk per trade: the 1–2% rule and position sizing
- Why the size of each trade matters more than your win rate
- The 1–2% rule, and how to turn it into a lot size
- How the same rule protects you in a losing streak
Most accounts don't die from bad trades
They die from big trades. A trader can be right 6 times out of 10 and still empty an account, because one oversized loss wipes out ten good days. The fix isn't a better entry: it's deciding how much you can lose before you open the trade.
The professional habit is simple: risk a small, fixed share of your account on each trade, usually 1% to 2%. Your stop loss decides where you're wrong; your lot size decides how much that costs.
Why 1–2%? Look at a losing streak
Every strategy has losing streaks. Here's what 10 losses in a row do to a $10,000 account:
| Risk per trade | After 10 losses | Gain needed to get back |
|---|---|---|
| 1% | $9,044 | +10.6% |
| 2% | $8,171 | +22.4% |
| 5% | $5,987 | +67.0% |
| 10% | $3,487 | +186.8% |
At 1–2% a bad run is an annoyance. At 10% it's the end of the account, and the maths of getting back is brutal.
From "2%" to a lot size, step by step
Three numbers decide your lot size: your account balance, the % you'll risk, and the distance to your stop loss in pips.
Example: $5,000 account, 2% risk = $100. EURUSD stop 25 pips away, pip value $10 per standard lot → 100 ÷ (25 × 10) = 0.40 lots.
Try it
- Picking the lot size first and placing the stop wherever it "fits" the money.
- Moving the stop further away during the trade, which quietly turns 2% into 5%.
- Opening three trades on correlated pairs (EURUSD, GBPUSD, XAUUSD all against the dollar): that's one 6% bet, not three 2% bets.
How this works when you copy trades
Check yourself
- Decide the money at risk before the trade: 1–2% of the account.
- The stop loss sets where you're wrong; the lot size sets how much it costs.
- Small risk keeps losing streaks survivable, and survival comes first.