Here is the impact of three different per trade risk levels – 1%, 2% and 10% – on an account balance of 100,000 over a 30 trade losing streak. If you’re applying sound RRR then that means risking 1% to potentially return 3%. You should only risk a small portion of your trading capital per trade: a good starting point would be to not risk more than 1% of your available capital per trade. You also need to consider your risk per trade as a percentage of your trading capital and set it at a conservative level, this is especially important when you’re new to trading and are likely to make more mistakes than someone with experience. If you can’t afford to lose the money you’re trading, then, unfortunately, trading is not for you. The Foreign Exchange markets are volatile, so it’s better to trade “conservative amounts” from your disposable income. If trading were like gambling at a casino, you wouldn’t take all the money you have to the casino to bet on black, right? Well, it’s the same with trading – don’t take unnecessary risks by using the money you need to live on.īecause it’s possible to lose all your trading capital, and secondly, because trading with funds you live on will add extra pressure and emotional stress to your trading, compromising your decision-making abilities and increasing the chances of making mistakes. Many traders, especially beginners, skip this rule because they assume that it “won’t happen to them”. It might sound obvious, but the first rule in Forex trading, or any other kind of trading for that matter, is to only risk the money you can afford to lose.