Position Sizing for an EA: Why Risk Only 1% per Trade

Start with some arithmetic

Losing 50% requires a 100% gain just to break even. The entire point of risk management is to keep you out of that hole — secure "I can afford to lose" before chasing "I want to win".

The 1% rule

Let no single trade lose more than 1% of the account (the loss when the stop is hit). That means a 10-trade losing streak draws the account down only about 10%, leaving you plenty of capital and composure to continue — while someone risking 10% per trade is finished after the same streak. Are 10-trade losing streaks common? Every strategy meets one eventually. It's not if, only when.

Lot size is calculated, not guessed

The correct order: set the stop location first (by ATR or market structure), then derive the lot size from "balance × 1% ÷ stop distance". Distant stop, smaller size; tight stop, slightly bigger — risk stays constant while size floats. EAs generated by TradingWithEA have this calculation built in; you only set the risk percentage.

Three bottom lines

• Trade only money you can afford to lose — leverage magnifies both directions.
• Never bet everything on one strategy or one symbol.
• At all times, surviving beats getting rich quickly.