The 1% rule: how much to risk per trade

The "1% rule" says: never lose more than 1% of your account on a single trade. It's not magic, and 1% isn't the only sensible number. But the idea behind it, a small, fixed risk on every trade, is what keeps traders in the game long enough for their edge to show.

What the rule actually says

It's about how much you lose if your stop is hit, not how much you put into the trade.

With a $5,000 account and a 1% rule, the most you should lose on any one trade is $50. The position itself can be much bigger than $50. Its size comes from how far away your stop is (see how to calculate position size).

Losing streaks happen to everyone

Even a good strategy has long runs of losses. With a 50% win rate, a run of 6 or 7 losses in a row over a few hundred trades is quite normal. Lower win rates, as is common with high risk-reward strategies, make longer streaks more likely.

Here's what 10 losses in a row does to an account at different risk levels, with each loss taken from the balance at the time:

Risk per trade	Account left after 10 losses	Gain needed to get back to the start
1%	90.4%	+10.6%
2%	81.7%	+22.4%
5%	59.9%	+67.0%
10%	34.9%	+186.8%

At 1%, a brutal streak is an annoying drawdown. At 10%, it's close to the end of the account, and you'd need almost to triple what's left just to get back to where you started.

Why it works

• Survival. Small losses leave you with enough capital to keep trading your edge.
• Consistency. When every loss costs about the same, your results reflect your strategy, not how big you happened to go on a few trades.
• Calmer decisions. A loss of 1% is easy to accept. A loss of 10% invites revenge trading, which is how one bad trade turns into a bad month.

Is 1% the right number for you?

Common choices range from 0.25% to 2% per trade. Things to weigh:

• Win rate: lower win rates mean longer losing streaks, so a smaller risk makes sense.
• How often you trade: more trades means more chances for streaks to cluster.
• Account size and goals: a very small account may feel slow at 1%. Taking bigger risks rarely fixes that, though; it usually just makes the account smaller faster.

Whatever you choose, pick it before you trade, and write it down. Raising it "just this once" is exactly how the rule gets broken.

How traders break the 1% rule without noticing

• Ignoring fees. On perps, opening and closing fees are added to a losing trade. A trade sized to lose exactly 1% before fees loses more after them.
• Moving the stop. Widening the stop after entry increases the loss beyond the plan.
• Adding to losers. Averaging down raises the size while the stop stays put.
• Sizing from a stale balance. After a few losses, 1% of the old balance is more than 1% of the new one.
• Rounding up. Always round the size down to your exchange's size step.

Measure it, don't just intend it

The rule only helps if you actually follow it, and memory is a poor judge of that. Track the actual risk % of every trade you take and count how many went over your limit. That number, your rule compliance, says more about your discipline than your win rate does.

TradeTurtle checks every trade against your own max-risk rule, including fees, flags trades that are near or over it, and shows your rule compliance as a headline stat next to your P&L.