The one rule that decides whether you survive: risk per trade
The 1–2% rule, why a 50% loss needs a 100% gain to undo, and the arithmetic of losing streaks. If you read one lesson, read this one.
Almost every account that dies in the first month dies of the same cause, and it is not a bad strategy. It is risking too much on single trades. This lesson is arithmetic, not opinion, and the arithmetic does not negotiate.
Losses are harder to undo than gains are to make
Lose 10% of an account and you need 11% to get back to level. That sounds fair. Keep going and it stops sounding fair very quickly.
| You lose | You then need |
|---|---|
| 10% | +11% to recover |
| 25% | +33% |
| 50% | +100% |
| 75% | +300% |
| 90% | +900% |
The asymmetry is why professionals obsess over drawdown while beginners obsess over entries. Once you are down 50% you are not playing the same game any more: you now need to double your money just to be where you were, and the pressure of needing to do that is what produces the reckless trades that finish the account.
The rule
Risk no more than 1–2% of your account on a single trade. Beginners should sit at 1%.
On a $100 account that is one dollar. Yes, that is small. That is the point: at 1%, a run of ten straight losses costs you about 10% of the account, which is annoying and survivable. At 20% per trade, five straight losses is the whole account — and five straight losses is not unusual, it is a normal Tuesday.
What a losing streak actually looks like
With a genuinely good 55% win rate, over 100 trades, the odds of hitting a run of five consecutive losses somewhere in there are high. A run of seven is entirely plausible. This is not bad luck; it is what randomness looks like up close, in the same way that a fair coin regularly produces five heads in a row.
So the question is never "how do I avoid losing streaks". It is "what does a normal losing streak do to my account?" Answer that number before you trade, not after.
| Risk per trade | After 5 straight losses | After 10 straight losses |
|---|---|---|
| 1% | −5% — a bad week | −10% — recoverable |
| 2% | −10% | −18% |
| 5% | −23% | −40% — serious trouble |
| 10% | −41% | −65% — effectively over |
| 25% | −76% | Account gone |
The daily stop
One more rule, and it is the one that saves people from themselves: stop trading for the day after three losses, or after losing 5% of the account, whichever comes first. Close the platform. Not "one more to get it back" — that trade is the one that turns a bad day into a bad month.
Set this rule while you are calm, because you will not set it while you are angry, and angry is exactly when it is needed.
Applying it to fixed-payout trades
With digital options the stake is the risk — there is no stop loss to place. So 1% of a $200 account means a $2 trade, and if the platform's minimum trade is larger than your 1%, your account is too small for that platform, not the other way round. Beginners routinely get this backwards and size up to meet the minimum.