How Much Should One Risk Per Trade?

 
A common question I get asked is how much one should risk in a given trade. Many traders have different perspectives on this, however I am very fond of the 2% rule. There are times however when there are many confluences where I may consider risking more than this, however overall this is a comfortable risk amount to stick under. This would also mean that by getting a good 2 to 1 reward to risk trade it would build an account by 4% and if one got a good 3 to 1 reward to risk trade it would build an account by around 6%. And to think, this is from a single trade perspective.

Breakdown using 2% risk per trade:

3 to 1 reward to risk trade offers a potential reward of 6%*
2 to 1 reward to risk trade offers a potential reward of 4%*
1 to 1 reward to risk trade offers a potential reward of 2%*

*Before targeting a 2 to 1 reward trade or more on a potential setup it is important to assess and make sure that the potential for that reward exists on that setup. Potential reward is evaluated by measuring setup risk vs room to opposing structure from entry in the market.

How to evaluate potential reward and filter this important aspect in detail before considering a trade in the market is gone over in detail in The Candlestick Training Series.