How much capital should I risk per trade?

Professional traders typically risk between 1% and 2% of their total account equity on any single trade. This approach ensures that a string of consecutive losses does not deplete the account balance. For an account with $10,000, a 1% risk limit means the maximum loss per trade is $100. If the trade hits the pre-determined stop-loss order, the trader exits the position immediately to prevent further capital erosion. Calculating risk requires identifying the distance between the entry price and the stop-loss level. Position sizing is then adjusted based on this distance. If a trader has a $10,000 account and wants to risk $100, they must calculate how many shares or contracts they can hold so that a move to the stop-loss level results in exactly a $100 loss. This calculation must account for transaction costs and potential slippage. Risking more than 2% per trade significantly increases the probability of account ruin. Beginners often start with 0.5% or 1% to gain experience while managing volatility. Trading involves significant financial risk, and past performance does not guarantee future results. Never trade with money that cannot be lost entirely.