Risk Per Trade

Risk per trade is the maximum you're willing to lose on any single position. It's expressed as a percentage of account equity (most common) or as a dollar amount. The professional standard is 1-2% per trade. Most retail traders blow up because they risk 5%, 10%, or more — accidentally turning a normal losing streak into account death. The math is simple. At 1% risk per trade, you'd need 100 consecutive losers to wipe out your account (which is statistically nearly impossible for any strategy with positive expectancy). At 5% risk per trade, you only need 20 losers in a row. At 10%, just 10 losers. The smaller the risk, the more survivable the bad streaks. Risk per trade also determines position size. Once you've decided your risk dollar amount and your stop loss distance, the lot size is forced — there's only one math answer for each setup.