The 1% Rule

Never risk more than 1% of your account on a single trade. That's it. That's the rule.

Why It Works

If you risk 1% per trade, you need 100 consecutive losses to blow your account. That's virtually impossible if you have even a remotely decent strategy.

Compare that to risking 5% per trade — just 20 losses and your account is gone.

How to Apply It

1. Know your account size — if you have $10,000, your max risk per trade is $100
2. Calculate position size — based on your stop loss in pips/points
3. Adjust for volatility — tighter stops = larger position, wider stops = smaller position
4. Never override — the rule applies to every single trade, no exceptions

Common Mistakes

• Risking 1% of the account value but having a stop loss that's too wide, so the actual dollar risk is correct but the probability of being hit is too high
• Increasing risk after wins ("I'm on a hot streak")
• Not reducing risk after losses

The Compound Effect

Stick to 1% and a 60% win rate with a 1:2 risk-reward ratio, and your account grows steadily. It's not exciting — but it works.