The 1% rule: how professionals never blow up
Amateurs ask 'how much can I make?'. Professionals ask 'how much can I lose?'. The single most important number in trading is the amount you risk per trade.
The 1% rule: never risk more than 1% of your trading capital on one idea. With Rs 100,000, that is Rs 1,000. Ten losses in a row would cost you 10%, painful but survivable. Most traders never survive ten bad trades because they risk 10% each.
Position size comes from the stop-loss, not from your feelings. Size = risk amount divided by the distance to your stop. If your stop is 5% below entry and you risk Rs 1,000, your position is Rs 20,000.
- Decide the stop-loss before you enter. Never move it further away.
- Measure results in R: 1R is the amount you risked. A trade that makes 3R pays for three losses.
- Winning 40% of the time is very profitable if your winners are 2R or more.
Barqish's position size calculator does this maths for you. Use it every time, even when you are sure.
Open the position size calculator and size a trade with 1% risk.
Test yourself
With Rs 200,000 capital and the 1% rule, how much may you lose on one trade?
- Rs 20,000
- Rs 2,000 ✓
- Rs 200
- Rs 50,000
1% of 200,000 is 2,000. That is your maximum loss if the stop-loss is hit.
Your stop is 4% below entry and you risk Rs 2,000. What position size?
- Rs 2,000
- Rs 8,000
- Rs 50,000 ✓
- Rs 200,000
Size = risk / stop distance = 2,000 / 0.04 = Rs 50,000. If the stop hits, you lose exactly Rs 2,000.
A trader wins only 40% of trades. Can she be profitable?
- No, you need 60% or more
- Yes, if her average winner is much bigger than her average loser ✓
- Only with leverage
- Only with signal groups
Profit = win rate times average win, minus loss rate times average loss. 40% wins at 2.5R beats 60% wins at 0.5R.
Roman Urdu mein parhein: 1% rule: professionals kabhi barbaad kyun nahi hote
Naye log poochte hain 'kitna kama sakta hoon?'. Professionals poochte hain 'kitna kho sakta hoon?'. Trading ka sab se aham number woh raqam hai jo aap har trade mein risk karte hain.
1% rule: ek idea par apne trading capital ka 1% se zyada kabhi risk na karein. Rs 100,000 par yeh Rs 1,000 hai. Lagatar das nuksan 10% ka kharcha hain, takleef-deh magar bardasht ke qabil. Zyada tar traders das buri trades nahi jheel pate kyunke woh har baar 10% risk karte hain.
Position size stop-loss se aata hai, jazbaat se nahi. Size = risk ki raqam taqseem stop tak ka faasla. Agar stop entry se 5% neeche hai aur aap Rs 1,000 risk karte hain to position Rs 20,000 hai.
- Entry se pehle stop-loss tay karein. Usay kabhi door na karein.
- Nateeja R mein naapein: 1R woh raqam hai jo aap ne risk ki. 3R banane wali trade teen nuksan ka bojh utha leti hai.
- 40% waqt jeetna bhi bohat munafa-bakhsh hai agar jeetein 2R ya zyada hon.
Barqish ka position size calculator yeh hisaab aap ke liye karta hai. Har baar istemal karein, jab yaqeen ho tab bhi.
Aham baat: Har trade 1% risk, size stop-loss se, sochna R mein. Zinda rehne ka poora raaz yahi hai.
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