Risk per trade
Risk per trade is the amount you lose if your stop-loss is hit, usually as a percentage of your account. A common rule for beginners is no more than 1–2% per trade.
How it works
Risk is not position size and not leverage; it is how much money is gone if the stop hits. You calculate it like this: dollar risk = account × risk percent. Then position size = dollar risk / distance to the stop. That way the risk is the same whatever the stop distance.
Small risk protects you from losing streaks, which everyone has. At 1% per trade, ten losses in a row leave about 90% of the account. At 10% per trade, ten losses leave about 35%, and getting back needs a gain of almost 190%.
Pick the percentage in advance and write it into your trading plan. Many experienced traders use 0.5–1% and cut risk temporarily during a losing streak. Recalculate the amount from your current balance, not the starting one.
Account $5,000, risk 1% = $50. Buy BTC at $60,000 with a stop at $58,800, which is 2% below entry. Position size = $50 / 0.02 = $2,500, or about 0.0417 BTC. If the stop is hit, the loss is $50 plus fees.
The main mistake is confusing risk with position size: 'I put in 1% of my account' while the stop is 50% away, or 'I risk 1%' while using the whole account with leverage and no stop. Set the stop from the chart first, then size the position from the risk amount.
Questions and answers
What is risk per trade in simple terms?
It is how much money you lose if price hits your stop. You set it as a percentage of your account.
How much should I risk per trade?
A common rule is 1–2% per trade, and beginners are better off with 0.5–1%. That way a losing streak cannot wipe out the account.
How do you calculate position size from risk?
Divide your risk amount by the stop distance in percent. With $50 of risk and a 2% stop, the position is $2,500.
Related terms
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Updated: 2026-10-19