Risk per trade: the only rule that survives a bad month
Position sizing is the single biggest determinant of whether a trader compounds or blows up. Here's how to size like a professional.
Every trader who has lasted more than a single cycle has converged on the same principle: risk per trade is fixed, small, and non-negotiable. The most common professional figure is 0.5% to 1% of account equity per position.
The math is unforgiving. A 50% drawdown requires a 100% recovery to get back to even. Sizing aggressively means a single bad week can take you out of the game permanently. Sizing conservatively means a bad week is a footnote.
Set your stop based on structure, not on a fixed percentage of price. Then size the position so that being stopped out costs your fixed risk amount. This decouples your sizing from volatility regime — you take smaller positions in volatile assets and larger positions in stable ones, automatically.