Most swing traders risk between 0.5% and 1% of the account on each trade, and rarely more than 2%. The right figure is the one that lets you sit through a long losing run: at 1% a run of ten losses costs about 9.6% of the account, at 2% about 18.3%, and at 5% about 40.1%.
| A run of | Costs | Of the account | Chance over 100 trades |
|---|---|---|---|
| 3 losses | −$297.01 | −3.0% | >99.9% |
| 5 losses | −$490.10 | −4.9% | 92% |
| 8 losses | −$772.55 | −7.7% | 31% |
| 10 losses | −$956.18 | −9.6% | 10% |
At 1.0% a trade it takes 69 straight losses to halve the account. The chances assume each trade wins 45% of the time, independently of the last.
The percentage is the decision; the lot size follows from it and the stop. Risk 1% of $10,000 and every trade can lose $100, whatever the market or the stop distance. The position size calculator turns that $100 into lots or shares.
| Risk per trade | A run of 5 | A run of 10 | Losses to halve the account |
|---|---|---|---|
| 0.5% | −2.5% | −4.9% | 139 |
| 1% | −4.9% | −9.6% | 69 |
| 2% | −9.6% | −18.3% | 35 |
| 5% | −22.6% | −40.1% | 14 |
Losing runs are not rare. At a win rate near 45%, the chance of seven or more losses in a row somewhere over 100 trades is about 50%. The losing streak calculator gives the odds for your own win rate, and the record’s own streaks show what a real run looked like.
A trader with $10,000 and a 1% rule risks $100 a trade. Ten losses in a row would leave about $9,044: painful, but every trade after it still risks a full 1% of what is left. The same run at 5% would leave about $5,987, and the next ten trades would have to make back about 67% just to get even.
A daily loss limit is a hard ceiling on the run you can survive in a day. With a 5% daily limit, 1% a trade gives five full losses before the limit; 0.5% gives ten. The prop firm drawdown calculator works out the room left on your own numbers.
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Get this week’s setupsFor most traders it is the upper end. At 2% a run of ten losses costs about 18.3% of the account, and it takes 35 straight losses to halve it. Many swing traders use 0.5% to 1% instead.
A percentage of the current balance shrinks the risk in a drawdown and grows it after gains, which protects the account. A fixed amount is simpler but does not slow down when you are losing.
The same percentage. A small account is where oversizing does the most damage; if 1% is too small to trade, use the smallest lot size and a tighter, honest stop, or wait until the account is larger.
A little, but losing runs still come. At a win rate near 55% a run of six losses over 100 trades still has about a 36% chance.