Risk per trade is the cap on what a single positionPositionA single entry held on the broker account, with a direction, a size, and a current floating result.Click the word to learn more can cost you. Usually a percentage of equityEquityThe live value of your broker account, including the floating profit or loss of open positions.Click the word to learn more. One percent on a 5,000 account means the worst-case lossLossThe realized loss on a closed position, or the sum of every losing position across a period.Click the word to learn more on any single position, if the stop fills cleanly, is 50.
This number is the input the rest of the risk math runs on. Position sizingPosition SizingThe rule that decides how large each position should be, given account equity and risk per position.Click the word to learn more takes it, plus your stop distance in pips, and produces a lot sizeLot SizeThe unit a forex order is measured in. One standard lot equals 100,000 units of the base currency.Click the word to learn more. Shrink the per-position cap and the lots get smaller, the equity curve gets smoother, growth gets slower. Stretch it and the curve gets faster on the way up and faster on the way down too. The trade-off is the same trade-off it has always been.
Most professional algorithmic strategies sit somewhere between 0.25 and 2 percent risk per position. The exact figure depends on how many positions the strategy opens in a month and what its win profile looks like. A high-frequency scalper at 0.5 percent and a low-frequency swing at 1.5 percent can carry the same monthly risk envelope.
The risk per trade of a Javlot strategy is disclosed on its page. On top of it, your account-wide drawdownDrawdownThe drop in account equity from a peak to the trough that follows, expressed as a percent of the peak.Click the word to learn more cap acts as a hard ceiling on what a losing sequence can cost you, regardless of how clean each individual stop fills.