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Glossary

Risk per trade

Part of the theme Risk and position sizing.

Definition

Risk per trade is the amount of account equity you will lose if a single trade hits its stop-loss, usually set as a small fixed percentage.

It is the loss on the trade, not the full position value. Keeping it small (commonly 1 percent) means even a long losing streak costs only a modest share of the account.

Formula / example: 1% of a $25,000 account is $250 of risk per trade

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