Risk Per Trade
Risk per trade is the fixed amount of capital, usually expressed as a small percentage such as 1 percent, that a trader budgets to lose on any single trade, and it is the input that fixed-fractional and risk-based sizing convert into a position size.
Risk per trade is the fixed amount of capital — usually a small percentage such as 1% — budgeted to lose on any single trade if its stop is hit, and it is the input that fixed-fractional and risk-based sizing convert into a position size. In a backtest it is the strongest single determinant of the simulated drawdown and risk of ruin: losses compound, so a large fraction lets a short losing streak in the equity curve do serious damage. BacktestGyan models how the fraction shapes the equity curve; the concept itself — the math, the 1% rule and the streak tables — is maintained at its canonical home on RiskManagementGyan, the network's risk authority.
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Risk per trade
Canonical explainer on RiskManagementGyan.
Position sizing
Canonical explainer on RiskManagementGyan.
Risk of ruin
Canonical explainer on RiskManagementGyan.
Related on BacktestGyan: Fixed-Fractional Position Sizing · Risk-Based Position Sizing · The Kelly Criterion · Fixed Position Sizing · Capital Allocation · Portfolio Allocation
Published 11 July 2026 · Updated 17 July 2026. This page is a summary; the canonical, maintained treatment of Risk per trade lives on RiskManagementGyan. Educational content only — not investment advice.