Risk per trade

Before each trade you should know, to the dollar, what you lose if it fails.

One number, decided in advance

Risk per trade is the amount you lose if your stop loss is hit. It is fixed before the trade, as a percentage of the account, and it does not change because a setup “looks good”.

Risk per trade:

After 10 losses in a row

Gain needed to get back to the start

For comparison: at 1% you keep 90%, at 5% you keep 60%, at 10% you keep 35%.

Ten losses in a row at the chosen risk. Slide it up and watch how quickly the account becomes unrecoverable.

The usual guidance is 1 to 2%. The ladder shows why. Ten straight losses at 1% leaves 90% of the account; at 5% it leaves 60%; at 10% it leaves 35%, and getting back to the start from there needs a 186% gain. Ten losses in a row sounds extreme, but over a few hundred trades it is close to certain for any method that wins less than 60% of the time.

From risk to size

Once the risk in money is fixed and the stop is placed from the chart, the position size is arithmetic:

Lots = Money at risk ÷ (Stop in pips × Pip value per lot)

Try it

Account balance ($)Risk per trade (%)Stop loss (pips)Pip value per standard lot ($)

Notice how the position size changes when you change the stop, while the money at risk stays exactly where you set it.

Quick check

1. Question 1 of 3

   Account $6,000, risk 1.5%. How much money is at risk per trade?

   A$90B$150C$60

Go deeper: Forex risk management: the complete guide · Position sizing in forex · The 1% Rule in Trading: What It Is and Why It Works · GBP/JPY Trading Guide: Why It Moves So Much · How Much Money Do You Need to Start Trading Forex? · Why Most Retail Traders Lose Money