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Risk management

Position sizing: the 1% rule

The rule is simple: never risk more than 1% of your capital on a single position. With €5,000, the most a trade can lose is €50.

By Camille Roy

1 min read

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The rule is simple: never risk more than 1% of your capital on a single position. With €5,000, the most a trade can lose is €50.

From the stop to the position size

Position size follows from the stop, not the other way round. If the stop sits 25 points from entry and you accept losing €50, each point must be worth €2.

Ten losses in a row at 1% leave 90% of your capital. Ten at 10% leave 35%.

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