Risk Rules and Daily Limits

Risk rules decide how long you survive. Here is how to set risk per trade, total open risk, loss limits and a drawdown plan that cuts size when things go wrong.

Risk per trade

Pick a fixed percentage of your account to risk on each trade, meaning the amount you lose if your stop is hit. Many swing traders use 0.5% to 1%; day traders often go lower. At 1%, ten losses in a row (which will happen eventually) cost about 10% of your account, painful but survivable.

A fixed risk budget per trade keeps any single loss small.

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