Risk Management
Risk Management First: Why the 1% Rule Keeps Traders Alive
How fixed-fractional risk protects your account from the losing streaks every trader eventually faces.
By CableAnalyst ·
Survival is the first edge
Every strategy, no matter how good, produces losing streaks. Risk management decides whether a losing streak is an inconvenience or the end of your account.
The fixed-fractional approach
The idea is simple: risk a small, fixed percentage of your current balance on each trade — many traders use 0.5%–1%.
- With 1% risk, ten losses in a row leaves roughly 90% of the account.
- With 10% risk, the same streak leaves about 35%.
Recovering from a 65% drawdown requires a gain of roughly 186%. Recovering from 10% requires about 11%.
Turning risk into a position size
- Decide your risk in money: balance × risk %.
- Measure your stop loss distance in pips from your entry.
- Divide the risk amount by (stop pips × pip value per lot).
Use the Position Size calculator on the Tools page to do this before every trade.
Practical habits
- Set the stop before the size — never the other way around.
- Reduce size after a set number of consecutive losses.
- Write your max daily loss down and stop trading when you hit it.
Education only. Trading involves substantial risk of loss.