Most durable systems risk between 0.5% and 1% of account equity per trade. In our own testing across two samples, only 0.5% remained robust out-of-sample — at 1.5% the drawdown more than doubled and the edge broke down. Size for the drawdown, not for the dream.
Increasing risk doesn't just scale returns proportionally — it scales variance faster than expectancy. A strategy with a genuine but modest edge can survive small sizing and drown at large sizing, because an ordinary losing streak now breaches your drawdown limit before the edge has a chance to recover.
We tested identical logic at 0.5%, 1.0% and 1.5% risk across a six-week real-tick sample and a 6.4-month sample. At 0.5% the six-month drawdown stayed near 5%; at 1.5% it ballooned past 12% and the out-of-sample performance degraded. Only the smallest setting held up on both samples.
Losses compound against you asymmetrically. A 20% drawdown needs 25% to recover; a 50% drawdown needs 100%. This is why controlling the downside matters more than maximising the upside — and why position sizing has more influence on your long-run equity curve than your entry method does.
Work backwards from invalidation. Decide the risk amount (say 0.5% of equity), measure the distance to your stop, and divide: risk ÷ (stop distance × contract value) = position size. Never choose a lot size first and then place a stop to justify it.
For most systematic strategies, yes. Our testing found risk above 1% degraded out-of-sample robustness substantially.
Reduce, never increase. Raising size to recover losses is how ordinary drawdowns become terminal ones.
Rules vary, but their daily and total drawdown caps effectively force small per-trade risk — typically well under 1%.