Risk Per Trade
Definition
Risk per trade is the maximum dollar amount or percentage of account equity you're willing to lose on a single trade. Most prop traders risk between 0.5% and 2% of their account per trade.
Risk per trade is the foundation of position sizing. If you have a $100,000 account and risk 1% per trade, your maximum loss per trade is $1,000. This determines your lot size based on how far away your stop loss is.
For prop trading, risk per trade should be calculated relative to both your account size and your remaining drawdown. If your max drawdown is $10,000 and you risk 1% ($1,000) per trade, you can sustain 10 consecutive losing trades before violation. At 2% risk, that drops to 5 consecutive losses — which is not uncommon.
Professional prop traders often reduce risk per trade as they approach drawdown limits or increase it slightly when they have a large cushion. This adaptive approach maximizes the chance of hitting the profit target while minimizing the risk of violation. PropJournal calculates and displays your risk per trade relative to remaining drawdown for every trade.
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