How much to risk per trade
The classic answer is 1–2% of the deposit. We tested it not in words but on the same set of trades over two years: what happens to the deposit at 0.5%, 1%, 2%, 3%, 5% and 10% risk — and what breaks when open risk isn't capped.
What risk per trade is
Risk per trade is the amount you lose if the stop is hit. It's measured as a percentage of the deposit: with a $1,000 deposit and 2% risk, the loss at the stop is $20. Position size is matched to this risk and the stop distance — that's what the position size calculator does. Leverage doesn't affect risk: it only changes margin.
Risk is calculated from the current deposit. After a winning streak positions grow, after a losing one they shrink. That's compounding working both ways: even a long streak of stops doesn't wipe out the deposit, and growth speeds up on its own.
The experiment: same trades, different risk
We took trades from two AI Trading Room scan strategies — "Bounce in a downtrend" (short) and "Inside-day breakout" (long) — over two years on Bybit futures: 1,245 trades with a 0.055% fee on entry and exit. Starting deposit $1,000, compounding, no more than 15% of the deposit under stops at once. When there are more signals than the cap allows, the result depends on which ones are taken — so each row is the median of 25 runs, with the usual spread in brackets.
| Risk | Result after 2 years | Per year | Max drawdown | Trades taken |
|---|---|---|---|---|
| 0.5% | $2,090 | ≈ 45% | −19% | 1,245 |
| 1% | $3,295 (3,185–3,429) | ≈ 82% | −36% | 1,186 |
| 2% | $5,094 (4,081–5,820) | ≈ 126% | −44% | 941 |
| 3% | $6,229 (4,738–8,822) | ≈ 150% | −50% | 791 |
| 5% | $8,562 (4,905–14,434) | ≈ 193% | −52% | 590 |
| 10% | $10,024 (2,899–21,077) | ≈ 217% | −76% | 277 |
What this shows:
- Growth slows down, drawdown doesn't. Going from 1% to 2% almost doubles the profit, while going from 5% to 10% adds only 24 percentage points a year — at a −76% drawdown.
- The spread explodes. At 1% all runs end close together: $3,185–3,429. At 10% — anywhere from $2,899 to $21,077. The result stops depending on the strategy and starts depending on luck: which trades fit under the cap.
- Higher risk means fewer trades. At 10%, only one trade fits under the 15% cap — the other signals are skipped. A strategy with an edge over many trades turns into a lottery over a few.
Want to check it with your own amount? Open the deposit simulator — it uses the same trades.
Why drawdown is bigger than it seems
Ten stops in a row at 1% risk is minus 9.6% of the deposit. So where does −36% in the table come from? Trades run in parallel. When the market reverses sharply, stops trigger on several coins at once — crypto moves together. Five open positions at 1% each means 5% of the deposit exposed to one event.
So risk per trade is only half of the rule. The other half is a cap on total open risk: what share of the deposit sits under stops at the same time. In the experiment it's 15%.
What happens without an open-risk cap
The same trades, but every signal is taken no matter how many positions are already open:
| Risk | With 15% cap | No cap | Drawdown without cap |
|---|---|---|---|
| 2% | $5,094 | $13,027 | −60% |
| 5% | $8,562 | $81,195 | −94% |
| 10% | $10,024 | deposit wiped out | −100% |
$81,195 looks tempting — but along the way the deposit fell 94% from its peak. Few people keep trading after that, and a slightly less lucky order of trades would have ended at zero — like at 10%, where simultaneous stops across many open positions wiped out the account. A backtest draws the final number, but you have to trade the whole road.
How to choose your percentage
- Start from drawdown, not returns. Ask yourself: what fall of my deposit can I survive without abandoning the system? If −20% — your risk is about 0.5%; if around −40% — 1–2%.
- Cap open risk. No more than 10–15% of the deposit under stops at once, even when there are many signals.
- Beginners — 1%. In the first months the goal is to survive mistakes and validate the strategy on the live market, not to grow the account fast.
- Don't raise risk after a losing streak to "win it back". Compounding already shrinks positions during drawdowns — that's what protects the deposit.
A backtest is history, not a promise: it has no slippage, funding or missed signals, so real drawdowns are usually deeper. Leave a margin of safety.
FAQ
What percentage of my deposit should I risk per trade?
1–2% suits most traders. In a two-year backtest of 1,245 trades, 1% risk gave a −36% drawdown, 2% — −44%, and 5% or more — over −50% with a wide spread of outcomes.
Why not risk 5–10% if returns are higher?
Returns grow slower than drawdown and spread. At 10% the backtest result ranged from $2,899 to $21,077 with a −76% drawdown, and without an open-risk cap the deposit was wiped out.
What is an open-risk cap?
The maximum that sits under stops across all open positions at once, for example 15% of the deposit. It protects against moments when the market reverses and stops trigger on several coins together.
Should risk be based on the starting or current deposit?
On the current one. Then positions shrink automatically after losses and grow after profits — compounding that protects the deposit from being wiped out.
Risk sized to your deposit — in every signal
AI Trading Room calculates the position size for your deposit and risk in every coin breakdown and scan signal.