The 1% Rule
Risk a tiny slice per trade so no single loss — or losing streak — can ruin you.
The 1% ruleNever risk more than ~1% of capital on a single trade. is the simplest, most powerful survival rule in trading: never risk more than ~1% of your trading capital on a single trade. “Risk” here means the distance from your entry to your stopA pre-set exit that caps your loss if a trade goes wrong. — the amount you’d lose if the trade hits its stopA pre-set exit that caps your loss if a trade goes wrong. — not the position’s total value.
- Risk = entry-to-stopA pre-set exit that caps your loss if a trade goes wrong., not position size — you can hold a large position and still risk only 1%, if your stopA pre-set exit that caps your loss if a trade goes wrong. is tight (next lesson connects the two).
- Survives streaks — at 1%, even a brutal run of losses dents you mildly; you live to recover.
- Removes ruinous emotion — when any single loss is trivial, you can follow your stops calmly instead of freezing or gambling to “win it back.”
Is 1% a hard rule, or can I risk more?
It’s a well-tested guideline, not a law — some risk 0.5%, some up to 2%. The principle matters more than the exact number: keep per-trade risk *small enough that a losing streak can’t ruin you*. Beginners should err lower (≤1%); the bigger your edge’s uncertainty, the smaller you should risk.