Risk Per Trade
The fixed share of your account you are willing to lose on any single trade.
Also called: risk percentage · r · one r · 1% rule
In plain language
Risk per trade is usually expressed as a percentage of account equity — commonly 0.5% to 2%. Multiply it by your account size and you get a dollar figure: your risk budget for this trade.
Keeping it constant is what makes results comparable. Every trade becomes one unit of risk, so a run of outcomes can be read as a sequence rather than a set of unrelated dollar amounts.
Because the percentage applies to current equity, the dollar risk shrinks automatically during a drawdown and grows during a winning run. The rule defends itself.
The formula
Maximum Risk
Account Size × (Risk Per Trade % ÷ 100)
- Account Size
- Your current account equity
- Risk Per Trade %
- The fixed percentage you accept losing, e.g. 1
Change the numbers
This is the concept as a working tool. Edit any field and watch what moves — that relationship is the thing worth remembering.
- Maximum Risk
- $100
- Risk Per Share
- $2
- Position Size
- 50shares
Widen the stop and the position shrinks. Tighten it and the position grows — but the $100 you risk never changes. That is the whole point of sizing this way.
Open the full position size calculatorWhy it matters
At 1% per trade, ten straight losses cost about 10% of the account — recoverable. At 10% per trade, the same streak takes roughly 65% and requires nearly tripling what is left to get back to even.
Common mistakes
- Raising risk on trades that feel especially good. Conviction is not an edge multiplier.
- Applying the percentage to the original deposit rather than to current equity.
- Counting each position separately while holding five correlated trades that all lose together.
Put it to work
Keep exploring
These concepts are connected. Understanding one usually makes the next one easier.
The amount of an asset you buy or sell in a single trade.
The set of rules that decides how much you can lose, before you think about what you can win.
The combined risk of every open position, measured as a percentage of your account.
The decline from an account’s peak value to its lowest point before a new peak.
The probability that a series of losses reduces an account below the point of recovery.