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Risk per trade

The fraction of the account a single losing trade is allowed to cost.

Risk per trade is decided before entry: if the stop-loss is hit, how much of the account is lost? Position size is then computed backward from that number. Risking 2.5% per trade with a stop 10% below entry means the position is 25% of the account, at most.

This is the discipline that separates systematic trading from gambling. Fixed risk per trade caps the damage of any single mistake and makes results a function of edge times repetition instead of one big bet. It also makes drawdowns estimable in advance.

The number interacts with everything else: more concurrent positions or higher risk per trade mean faster compounding and deeper drawdowns. There is no free choice here, only a chosen trade-off, and it should be published.

How this platform applies it: read the methodology.
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