What Is Risk Per Trade?
Risk per trade is the amount of your account you are prepared to lose if your planned stop-loss is hit.
For example:
Account = £10,000
Risk = 1%
£10,000 × 0.01 = £100
Your planned risk is £100.
Why Use Percentage Risk?
Percentage risk keeps your risk proportional to your account.
If the account changes, your risk amount can change accordingly.
Example
Account = £5,000
Risk = 1%
Risk amount = £50.
Account = £20,000
Risk = 1%
Risk amount = £200.
Key Takeaways
- Risk is usually better thought of as a percentage.
- 1% risk means risking 1% of the account.
- Your exact risk level should fit your strategy and circumstances.
Disclaimer
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
