How much to risk per trade
Risk between 0.5% and 2% of your account on any single idea. That range is not arbitrary — it is the band where a realistic losing streak is uncomfortable but recoverable. Above about 5%, ordinary variance produces drawdowns that require extraordinary returns to undo.
The maths that sets the range
Losing streaks are not rare and they are not evidence that something is broken. On a strategy that wins half its trades, a run of ten losses shows up roughly once in a thousand trades. If you take five trades a week, that is once every four years — comfortably inside a trading career.
So the question is not "what can I afford on this trade" but "what does a normal bad run cost me".
| Risk per trade | After 5 losses | After 10 losses | Gain needed to recover |
|---|---|---|---|
| 0.5% | −2.5% | −4.9% | 5.1% |
| 1% | −4.9% | −9.6% | 10.6% |
| 2% | −9.6% | −18.3% | 22.4% |
| 5% | −22.6% | −40.1% | 67.0% |
| 10% | −41.0% | −65.1% | 186.4% |
The final column is the one that matters. Drawdowns are asymmetric: losing 65% does not require a 65% gain to recover, it requires 186%. That asymmetry is why the professional range sits where it does, and it does not care how good you think the setup is.
Why conviction sizing fails
The argument for sizing up on a great setup sounds reasonable: allocate more where the edge is bigger. The problem is that conviction is not a measurement. It is highest when you have spent the most time building a thesis — which is also when you are most anchored to it and least able to abandon it cleanly.
Worse, it clusters. The trades you feel strongest about tend to be correlated — same narrative, same sector, same macro read — so the one time you sized up is the one time several positions fail together.
Keep risk flat. Let the difference between a 1.5R setup and a 3R setup do the work; that is what reward-to-risk is for.
Where the percentage goes wrong in practice
- Risking per position instead of per idea. Three correlated longs at 1% each is a 3% idea, not three 1% ideas.
- Forgetting fees and slippage. On small accounts and illiquid pairs these can be a meaningful share of a 1% risk budget.
- Recalculating from the original balance. After a drawdown, 1% of the current account is a smaller number. That is the mechanism working — do not override it.
Then let the stop set the size
Once the percentage is fixed, the position size falls out of the stop distance — see how to set a stop loss and the calculator. In ChartLens this is the risk-confirm step, which shows what a stop-out costs in currency before you commit to anything.
People also ask
What percentage should I risk per trade?
Between 0.5% and 2% of account equity. At 1%, a ten-trade losing streak costs under 10% and is recoverable without changing anything. At 10%, the same streak costs 65% and needs a 186% gain to undo.
Can I risk more on a high-conviction setup?
You can, and it is how good traders have bad months. Conviction is not measurable and peaks exactly when you are most anchored to a view. Keep risk flat and let the setup’s reward-to-risk do the differentiating.
Should risk scale with account size?
It already does — a percentage is proportional by definition. What should change is the absolute number you are comfortable seeing, which is a reason to lower the percentage as the account grows, not raise it.
How long can a losing streak realistically get?
Longer than intuition suggests. On a strategy that wins half the time, ten consecutive losses occurs roughly once every thousand trades — which is a career, not a freak event. Size for that, not for the average.
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Written by The ChartLens team. Last updated .