What is risk per trade?
Risk per trade is the amount of money you lose if a trade hits its stop, usually set as a fixed share of the account — for example 0.5% or 1%. It is decided before the entry, and together with the stop distance it determines the position size.
Key points
- Set in percent of the account, applied in money.
- Position size = risk in money ÷ (stop distance × value of one point).
- Smaller risk means more losses fit before a limit is reached.
How it sets position size
Position size follows from three numbers: the account balance, the risk percentage and the stop distance. Size = (balance × risk %) ÷ (stop in pips or ticks × value of one pip or tick per lot or contract).
Risk per trade and loss limits
Risk per trade decides how many losing trades fit inside a limit. With a 5% daily limit, the 3rd loss in a row reaches it at 2% risk, the 5th at 1%, the 10th at 0.5%. A plan that keeps the limit out of reach of an ordinary losing streak is the main defence against one bad day.
Example
Balance $10,000, risk 1% = $100. The stop is 15 pips on EURUSD, where one standard lot is worth $10 per pip: size = $100 ÷ (15 × $10) = 0.66 lots, rounded down, so the actual risk is $99.
Numbers are illustrative.
Questions
What is a normal risk per trade?
There is no single standard. Often-quoted rules of thumb are 1–2% of the account; with tight daily limits, as in prop-firm evaluations, a smaller risk leaves room for ordinary losing streaks.
Should risk change during the day?
Only by a rule set in advance — for example halving risk after a loss or on a low-readiness day. Raising it to win back a loss is revenge trading.
Sources
- StatWidget calculation: losses that reach a limit = limit ÷ risk per trade, rounded up.