Most traders pick a risk per trade by thinking about how much they could make. It works better the other way around: start with how much you can stand to lose.
Losing streaks add up quickly
Every strategy has losing runs. Here is roughly what ten losses in a row do to an account, before costs:
- At 0.5% risk per trade, a fall of about 5%
- At 1% risk, about 10%
- At 2% risk, about 18%
- At 5% risk, about 40%
Recovering takes more than the fall itself. After a 40% fall you need a gain of about 67% to get back to where you started.
Start from the drawdown you can tolerate
Decide on the biggest fall you could live through without switching the EA off in a panic. Then:
- Find the strategy's deepest drawdown in R on its results page
- Allow for a worse one, because the deepest so far won't always stay the deepest. Doubling it is a cautious habit
- Divide your tolerable fall by that number
For example, say you could accept a 15% fall, and a strategy's deepest drawdown has been 7R. Doubled, that's 14R. Dividing 15% by 14 gives roughly 1% per trade.
Several strategies count together
If you run three strategies at 1% each, they can all lose on the same day. Add up your risk across everything that can be open at once, especially when strategies trade the same market.
Your account's rules come first
On a prop-firm account the firm's daily and overall limits decide your number, not your comfort. Keep well inside them.
Choose before you start
Pick your number while you're calm, write it down, and change it only after thinking it through, not straight after a win or a loss.
This is general education, not personal advice. Only risk money you can afford to lose.