GLOSSARY · RISK
What is risk per trade?
Risk per trade is the fraction of account equity a single position is allowed to lose if its stop is hit, and it is the setting that determines survival more than any other.
What it means
It is expressed as a percentage rather than a fixed amount so that position sizes shrink automatically during a losing run and grow during a winning one. That property alone prevents the most common way accounts are destroyed: increasing size after losses to recover them.
Why it matters
The conventional range is one to two percent, and the arithmetic behind it is worth internalising. At 2% risk, ten consecutive losses cost roughly 18% of the account; at 5%, the same run costs 40%. Ten consecutive losses are not unusual for a system with a 45% win rate — they should be expected within a few hundred trades.
What this changes in practice
Our engine defaults to 1.5%, scaled down to about 1.0% in mixed and choppy conditions. Both figures assume the stop is respected, which the broker minimum lot can silently prevent on small accounts — the configured percentage is a ceiling the platform can override upward, never downward.
Related terms
- Position sizePosition size is the lot quantity chosen so that the distance to your stop loss equals a predete…
- DrawdownDrawdown is the decline from a peak in account equity to the subsequent trough, expressed as a p…
- Risk of ruinRisk of ruin is the probability that an account falls below a defined threshold given a strategy…
- Minimum lot sizeThe minimum lot size is the smallest position a broker will accept, usually 0.01 lots, and it pu…
Educational information only, not financial advice. Trading leveraged products carries substantial risk of loss. Last updated 2026-08-11.