How much to risk per trade: the rule that decides whether you survive

You can have the best strategy in the world and still blow the account. The cause is almost always the same: risking too much per trade. Losing streaks happen to everyone; what decides whether you survive is how much each one costs.

Risk per trade, in one sentence

It's the percentage of the account you lose if the stop loss is hit. On a 10,000 account at 1% risk, every stop costs you 100, whatever the symbol or the stop size.

What 10 losses in a row do

And recovering isn't symmetrical: after a 20% drop you need +25% to get back; after 40%, +67%; after 50%, +100%. That's why most professional traders risk between 0.5% and 1% per trade.

• Risking 1%: the account drops 9.6%.
• 2%: it drops 18.3%.
• 3%: it drops 26.3%.
• 5%: it drops 40.1%.

How to size the position

Lots = money at risk ÷ (stop distance × pip value per lot).

EURUSD example: you risk 100 with a 20-pip stop. A standard lot is worth about $10 per pip, so 100 ÷ (20 × 10) = 0.5 lots. With a 40-pip stop the size drops to 0.25: the money at risk stays the same, the size changes.

No need to do it by hand: Katanith's position size calculator does it for you, free and without signing up.

Rules that work

• Fixed risk per trade, decided before you open the chart.
• Cut risk in a drawdown: e.g. halve it after a 5% drop and go back to normal once you recover.
• Daily limit: stop trading for the day after losing twice your risk. Prop firms require it.
• Never size up to recover. It's the fastest way to turn a bad week into a blown account.

Measure it, don't assume it

In Katanith every trade stores its risk and its result in R, and Analytics shows your real average risk, how consistent it is and the optimal risk according to your numbers. Many traders discover there that they risk more than they think.