How much should I risk per trade?

    Quick Answer

    Professional traders typically risk 1-2% of their total account on any single trade.

    Detailed Explanation

    The widely accepted rule among professional traders is to risk no more than 1-2% of your total trading account on any single trade. This risk management approach, known as the 1% rule or 2% rule, ensures that a string of losing trades won't significantly damage your account. For a $10,000 account, this means risking $100-$200 per trade maximum.

    Key Points

    • 11% rule for conservative traders
    • 22% rule for moderate risk tolerance
    • 3Never exceed 5% on any single trade
    • 4Adjust position size based on stop loss distance
    • 5Total portfolio risk should stay under 6-10%

    Example

    With a $25,000 account using the 2% rule: Maximum risk per trade = $500. If your stop loss is $5 away from entry, position size = $500 ÷ $5 = 100 shares.

    Common Mistakes to Avoid

    • ✗Risking too much on 'sure things'
    • ✗Not adjusting size for volatile assets
    • ✗Ignoring correlation between positions
    • ✗Moving stops to increase risk

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