The 1% rule: how beginners protect their trading account

The most common reason beginners lose their whole account is not a bad strategy. It is risking too much on each trade. The 1% rule is a simple habit that helps prevent this.

What is the 1% rule?

You decide never to risk more than 1% of your account on a single trade. On a $500 account, that is $5 per trade.

It sounds small, and that is the point. A run of losing trades, which every trader experiences, will not wipe you out.

Why it works

Losing trades in a row	Account left at 1% risk	Account left at 10% risk
5	about 95%	about 59%
10	about 90%	about 35%

Small risk keeps you in the game long enough to learn.

How to apply it in three steps

1. Find your risk amount. Account balance × 1%.
2. Place your stop-loss where your trade idea is proven wrong on the chart.
3. Size your position so that hitting the stop costs only your risk amount.

Step 3 is where most people guess. Use our free position size calculator instead.

A note on expectations

The 1% rule does not make you profitable by itself. It controls how much you lose when you are wrong, which gives you time to practise and improve. Always start on a demo account.