{"term":{"slug":"risk-per-trade","term":"Risk Per Trade","definition":"The maximum dollar amount or percentage of account balance you are willing to lose on a single trade. Most prop firm traders risk 0.5-2% per trade to ensure they can withstand losing streaks without breaching drawdown limits.","extendedExplanation":"Risk per trade is the single most important variable in prop firm survival. Too high and a losing streak terminates the account. Too low and you cannot hit the profit target in a reasonable time. The sweet spot for most traders is 0.5-1.5% of account balance.\n\nThe math dictates the boundaries. With a 5% daily loss limit and 1% risk per trade, you can take 5 consecutive losses before hitting the daily limit. With 2% risk, only 2.5 losses. Given that 3-5 consecutive losses are common even in profitable strategies, 2% risk leaves almost no margin for error.\n\nRisk per trade should also account for the profit target timeline. On FTMO with no time limit, you can afford lower risk (0.5%) and take more trades. On firms requiring minimum trading days or having monthly subscription fees, there is pressure to trade with higher risk to pass faster -- but this increases blow-up probability.","exampleWithNumbers":"FTMO $100K with 10% max drawdown ($10,000) and 5% daily loss ($5,000). At 1% risk ($1,000/trade): max 5 consecutive losses before daily limit, max 10 before total drawdown breach. At 2% risk ($2,000/trade): max 2 before daily limit, max 5 before total breach. Statistics show a 50% win rate strategy has a 3.1% chance of 5 consecutive losses -- acceptable at 1% risk, dangerous at 2%.","category":"risk","relatedTerms":["position-sizing","daily-loss-limit","stop-loss","risk-reward-ratio","drawdown-recovery"]},"_links":{"self":"https://runvigil.app/api/glossary/risk-per-trade","page":"https://runvigil.app/learn/risk-per-trade","allTerms":"https://runvigil.app/api/glossary","learn":"https://runvigil.app/learn"}}