How Much Should You Risk Per Trade?
Risk per trade is the share of your account you lose if the stop is hit. Here is what different choices do to a losing run.
Size My TradeThere is no universal answer, and nobody who does not know your strategy, your win rate, your account and your tolerance for losses can give you a correct percentage. What can be done is to show the arithmetic of each choice, so that you decide with the consequences in front of you.
Risk per trade is the share of your account you lose if the stop-loss is hit. It is not the size of the position. A large position with a tight stop and a small position with a wide stop can risk the same amount. The position size calculator below turns the risk you choose and your stop distance into a position size.
The table shows what ten losing trades in a row do when each trade risks a fixed share of the current balance. At 1% per trade, the balance after ten losses is 90.4% of the start, and a gain of about 10.6% brings it back. At 5% per trade, it is 59.9%, and getting back needs a gain of 67%. At 10% per trade, only 34.9% is left. The same run of bad luck costs very different amounts.
A run of losses is not unusual. How likely a run is depends on your win rate, and the losing streak calculator and the risk of ruin calculator show it for your numbers. A useful question to ask is how long a losing run you could take, financially and emotionally, without changing how you trade.
The harder part is keeping to the number. Many traders raise their risk after a win or after a loss without deciding to. That drift is measurable from your trade history, and the position sizing analyzer shows whether your size moves with your results.
Position size (units)
0.041667
Position value
2,500.00
Amount at risk
50.00
Position value vs. your balance
0.50×
Distance to the stop
1,200.00 (2.00%)
Ignores fees and slippage. A position bigger than your balance needs leverage, and its liquidation price is set by your exchange.
A calculator uses numbers you type in. To see what your own trades actually show, upload your trade history.
Analyze my tradesWhat ten losses in a row do at different risk levels
Each trade risks a fixed share of the current balance. The table shows the balance left after ten losing trades in a row, and the gain then needed to get back to the start.
| Risk per trade | Balance left | Drawdown | Gain to recover |
|---|---|---|---|
| 0.5% | 95.1% | 4.9% | 5.1% |
| 1.0% | 90.4% | 9.6% | 10.6% |
| 2.0% | 81.7% | 18.3% | 22.4% |
| 5.0% | 59.9% | 40.1% | 67.0% |
| 10.0% | 34.9% | 65.1% | 186.8% |
Illustration of the arithmetic, not a forecast. A run of ten losses is rare at most win rates, and the losing-streak calculator shows how rare.
How to think about it
Start from the losing run
Decide how large a fall you could accept, then work back to the risk per trade that keeps a realistic losing run within it.
Risk is not leverage
The amount you lose at your stop depends on position size and stop distance. Leverage decides how much margin the position needs, not how much you lose at the stop.
Fixed or on the current balance
Risking a share of the current balance shrinks your bet after losses and grows it after wins. Risking a fixed amount does not. Choose one and keep to it.
Write it before the trade
A number chosen in advance is easier to keep than one chosen in the moment. Put it in your plan and check your history against it.
Frequently asked questions
Is 1% risk per trade a good rule?
It is a common convention among traders, which makes it a reasonable starting point to examine, not a rule that suits everyone. Whether it fits depends on your win rate, your payoff and how large a drawdown you can accept.
Should risk be a percentage of my current or my starting balance?
Either can work if you apply it consistently. A percentage of the current balance scales down after losses and up after wins. A fixed amount stays the same. What causes trouble is switching between the two depending on how the last trade went.
Does leverage change how much I risk per trade?
Not directly. The loss at your stop is position size times the stop distance. Leverage changes how much margin you need and how close the exchange liquidation can be, so the stop has to be hit well before it.
Should I risk more when I am winning?
Raising risk is a decision to take on more, and it is worth making by a rule written in advance, not because the last trades felt good. Check your history for whether your size grows after wins, which is a common drift.
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Holdy Lab content is educational and is not financial advice. Results describe the data you provide; they do not predict future results.