The 1% Rule and Why Professional Traders Use It
The most widely followed position sizing rule in professional trading is never risking more than 1–2% of your account on any single trade. This rule exists because it mathematically prevents any single losing trade from inflicting catastrophic damage to your capital. Even a streak of ten consecutive losses at 2% risk leaves you with 82% of your starting capital — a recoverable position. The same streak at 10% risk leaves you with just 35%.
How Leverage Affects Position Sizing
Leverage amplifies both gains and losses, which means it must be factored directly into position size calculations. This calculator handles leverage correctly — your maximum loss in dollar terms stays fixed at your chosen risk percentage regardless of the leverage multiplier, but your position size and liquidation proximity change accordingly. Use the leverage selector carefully and always understand your liquidation price before entering any leveraged position.