# Risk per trade: a small share of the account > Fix how much of the account one trade may cost if it goes wrong, and see why a small share, such as 1%, keeps you alive through a long losing run. - Course: [Trading Basics: How It Works, How Not to Lose Everything](https://productovi.com/courses/trading.md) - Module: How much can I lose on one trade? - Lesson 9/32, ~25 min - Source: https://productovi.com/courses/trading/risk-per-trade ## Invested is not risked **Alex Tutor:** Back on your Pebble practice account, today's question is the most important one in this course: how much can one trade cost you? **Nora:** Easy. I put 3,000 dollars into Bluefin Energy, so I'm risking 3,000. **Alex Tutor:** That's what you invested, not what you risk. If you have a **stop-loss** under your entry, the risk is what you lose when that stop fills, plus costs. **Marc:** Say 100 shares at 38.00 with a stop at 37.00. If the stop fills, I lose about 1.00 a share: 100 dollars plus costs. That's my risk, not the 3,800 in the position. ![Nora carries a heavy basket full of pebbles, while Alex points to one small blue pebble resting on a low rope and Marc sticks a note onto a post.](https://productovi.com/courses/trading/diagrams/m3-l1-scene.png) **Alex Tutor:** Exactly. **Risk per trade** is that loss written as a share of the account. 100 dollars on a 10,000 account is 1%. **Sofia:** And without a stop? **Alex Tutor:** Then you can't say what the trade risks, and the honest answer is "the whole position". That's one reason a stop is part of every plan here. > **Exercise:** What is the risk of a trade? **Alex Tutor:** Let's check Marc's numbers with costs. Say buying and selling cost him 0.04 a share in total. > **Exercise:** Marc buys 100 shares at 38.00 with a stop at 37.00. Costs for buying and selling are 0.04 a share in total. How many dollars does he lose if the stop fills? **Alex Tutor:** And Nora's Bluefin trade has no stop at all. What does it risk? > **Exercise:** Nora holds 3,000 dollars of Bluefin Energy with no stop. What can she honestly say the trade risks? ## A small fixed share **Alex Tutor:** Common examples are 0.5% to 2% per trade. On 10,000 dollars that's 50 to 200. The point isn't the exact number: you pick one small share and keep it for every trade. **Marc:** And I decide the share once, at a calm moment. Not right after a win, when I feel brave, and not after a loss, when I want it back. **Nora:** 100 dollars? I make that on one good day. Why so small? **Alex Tutor:** Because losses come in runs, and runs are longer than people expect. A good plan can still lose ten times in a row. The question is what's left after the run. > **Exercise:** Your account is 8,000 dollars and you risk 0.5% per trade. How many dollars may one trade lose? **Sofia:** So on this account, at 1%, my first trade may lose 100 dollars. **Nora:** Fine. Now show me this famous losing run. ## Twenty losses in a row **Alex Tutor:** Here's a 10,000 account through 20 losses in a row, at three risk levels. Each loss takes that share of the account as it stands at the moment. **Dataset (CSV):** [A 10,000 account through a losing run](https://productovi.com/datasets/trading/risk-per-trade/m3_losing_run.csv) Each loss is 1%, 2% or 10% of the account at that moment, rounded to cents. - `losses`: Losses in a row so far - `account_1pct`: The account when risking 1% per trade - `account_2pct`: The account when risking 2% - `account_10pct`: The account when risking 10% **The same losing run at three risk levels** | Losses in a row | 1% per trade | 2% per trade | 10% per trade | | --- | --- | --- | --- | | 0 | 10000 | 10000 | 10000 | | 5 | 9509.9 | 9039.21 | 5904.9 | | 10 | 9043.82 | 8170.73 | 3486.78 | | 15 | 8600.59 | 7385.7 | 2058.9 | | 20 | 8179.07 | 6676.09 | 1215.77 | > **Exercise:** Risking 10% per trade, what is left of the 10,000 account after 10 losses in a row, in dollars? **Nora:** Ouch. 65% gone in ten trades. **Marc:** And look at 1%: after ten losses you've lost under 10%. You're annoyed, not finished. You can still trade the plan. **Sofia:** Why does the 1% line bend, not fall in a straight line? **Alex Tutor:** Because 1% of a smaller account is fewer dollars. Your risk shrinks after losses and grows after gains, all by itself. That's why it's a share, not a fixed amount. > **Exercise:** How many losses in a row does it take to halve a 10,000 account? Match each risk level with the answer. **Nora:** But I'm not going to lose seven times in a row. I'm good at this. **Alex Tutor:** Three months is too few trades to know that. A small fixed risk means you don't have to know yet. It buys you time to find out. **Marc:** Last spring I had nine losses in a row with a plan I still use. At 1% it cost me under 9% of the account. At 10% it would have cost more than half. > **Exercise:** Risking a fixed 1% per trade means the dollar risk stays the same after a run of losses. **Alex Tutor:** One last check before you talk to Nora: when should the share be chosen? > **Exercise:** When is the right moment to choose your risk share per trade? **Marc:** My rule is written on a sticky note: one trade may cost 1%, never more. **Alex Tutor:** Now explain it in your own words to Nora. **Nora:** Go on, convince me. > **Exercise:** Nora says: "Risking 1% is for cowards. With 10% per trade I'll grow ten times faster." In 2–3 sentences, answer her with numbers from the losing run. > **Key ideas** > > - What you **invest** is the size of the position; what you **risk** is the loss if the stop fills, plus costs. > - **Risk per trade** is that loss as a share of the account. Common examples: 0.5–2%; on 10,000 that is 50–200 dollars. > - Losing runs are normal. Ten losses in a row leave 9,043.82 at 1%, 8,170.73 at 2% and 3,486.78 at 10%. > - Halving the account takes 69 losses in a row at 1%, 35 at 2% and only 7 at 10%. > - A share of the current account shrinks your dollar risk after losses by itself. > **Educational, not advice** > > This course explains how trading works; it never tells you what to buy or sell. A small risk per trade slows losses down; it does not make a plan profitable. Most people who trade lose money, and you can lose all of it. For taxes and rules, ask a licensed professional where you live. - Previous lesson: [Case: place the right order](https://productovi.com/courses/trading/choose-the-right-order.md) - Next lesson: [The stop: where it goes and why](https://productovi.com/courses/trading/where-the-stop-goes.md) --- Productovi Learning. Free, no sign-up needed to read.