Never trade with more than 2% risk

What is the maximum amount of money you should risk per trade？

Try to keep your risk to less than 2% per deal.

However, such figure could be exaggerated. Especially if you're a newcomer to the FX market.

Here's an important diagram that demonstrates the difference between risking a small percentage of your capital per trade versus risking a larger percentage of your capital per trade.

Risking 2% per trade vs. 10% per trade

You can see how there is a significant difference between risking 2% of your account and risking 10% of your account on a single trade!

If you risked 10% on each trade and had a losing streak of only 19 trades, you would have gone from $20,000 to $3,002 if you started with $20,000 and lost 19 trades in a row.

You'd have lost more than 85% of your money!

Even if you had only risked 2%, you would still have $13,903, which is only a 30% loss on your overall amount.

Of course, we don't want to lose 19 transactions in a row, but even if you only lose 5 trades in a row, consider the difference between risking 2 and losing 19.

Even if you had only risked 2%, you would still have $13,903, which is only a 30% loss on your overall amount.

Of course, losing 19 transactions in a row is the last thing we want to do, but even if you only lose 5 trades in a row, consider the difference between risking 2% and risking 10%.

You'd still have $18,447 if you took a 2% risk.

You'd only have $13,122 if you took a 10% risk.

That's less than you'd have gotten if you'd lost all 19 transactions and simply invested 2% of your account!

The objective of this illustration is that you should build up your risk management procedures such that you have enough cash to stay in the game even if you have a downturn time.

Can you picture losing 85% of your account balance？

To go back to break even, you'd have to make 566 percent on what you're left with!

You don't want to be in that situation, believe us.

“Can you tell me what I need to do to get back to breakeven？”

Here's a table that shows how much you'd have to produce in order to break even if you lost a given proportion of your account.

As you can see, the more money you lose, the more difficult it is to get your account back to its original size.

This is all the more reason why you should PROTECT your account at all costs.

Do you have any idea how well (or badly) your trade went？

To figure out what proportion of your account balance you have won or lost, use our Gain & Loss Percentage Calculator. It also calculates the proportion of current balance needed to return to breakeven.

We hope you've drilled it into your head by now that you should only risk a modest percentage of your account per transaction in order to survive losing streaks and avoid a huge drawdown in your account.

Keep in mind that you want to be the casino.