Risk Management Rules Every Prop Trader Must Know

Risk Management Rules Every Prop Trader Must Know

Introduction

Risk management is the most important skill in prop trading. It's not about making big profits—it's about surviving long enough to make consistent profits. In this guide, we'll cover the essential risk management rules that separate successful traders from those who fail.

The Golden Rule: Risk Per Trade

The 1-2% Rule

<strong class="text-foreground font-semibold">Never risk more than 1-2% of your account on a single trade.</strong>

Example: - Account Size: $100,000 - Risk Per Trade: 1% = $1,000 - If stop loss is 50 pips, position size = 20 micro lots

Why This Works: - Protects your account from large losses - Allows for losing streaks - Enables long-term survival - Reduces emotional stress

Calculation: Never risk more than 1-2% of your account on a single trade.