What the rule says
The 1% rule is simple: limit what you’d lose if a trade hits your stop to 1% of your total account. On a 1,000 account, that caps your maximum loss per trade at 10.
Why 1%
- It leaves room for a losing streak to survive — even 10 losses in a row leaves you around 90%, still recoverable
- No single mistake is big enough to wreck you psychologically — lowering the odds of an emotional revenge trade
- The math is simple enough to apply consistently in real trading
It doesn’t have to be exactly 1%
This number is a starting point, not an absolute answer. Depending on risk tolerance and trading style, some use 0.5% or 2% instead. What matters isn’t the specific number — it’s the principle of holding a consistent percentage across every trade.
Put it into practice
Starting this week, add one field to your journal: "what percentage of my account did this trade risk?" After a few weeks, you’ll be able to see for yourself how well you actually followed the rule — and the difference in outcomes between weeks you followed it and weeks you didn’t.
← Back to Guide Index