With a tight daily loss limit (e.g. 2%), how much should each trade risk?
Static risk approach:
- Fixed risk per trade, e.g. 0.4%.
- Allows 5 losses before hitting the cap.
- Simple, consistent.
Considerations:
- Number of trades per day: if you take 8 trades, 5 losses is possible.
- Win rate: at 55%, five or more losses in eight trades happens roughly one day in four.
- Recovery: after 3 losses (−1.2%), only 2 more losses allowed.
Alternative: decreasing risk after losses.
- Trade 1–2: 0.5%.
- After a loss: 0.4%.
- After two losses: 0.3%.
- Stretches the remaining buffer.
Static risk is simpler and avoids second-guessing. Decreasing risk is more defensive.
What risk per trade do you use relative to your daily cap?
Static risk per scalp under a tight daily cap
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FXS London Scalper
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Static risk per scalp under a tight daily cap
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