Many trading books and courses recommend risking a fixed amount per trade — often a percentage of your account like 1%. This rule helps enforce discipline, consistency, and risk control. But the idea that you must always risk a fixed amount on every trade is a myth. In reality, flexible risk sizing — when done intentionally and within clear parameters — can improve performance, reduce psychological strain, and optimise for different market conditions.

Why fixed risk per trade is popular

1. Simplicity and structure
Risking a constant amount — say, £100 or 1% of your account — standardises decision-making. You don’t need to recalculate or second-guess size.

2. Controls emotional swings
Fixed risk protects traders from betting too big after a win or chasing losses after a drawdown. It builds stability and prevents destructive volatility.

3. Improves journaling and analysis
When your risk is constant, it’s easier to assess performance — you can focus on trade quality rather than size variation.

4. It’s prop firm–friendly
Many proprietary trading firms require consistent risk across trades. Fixed sizing helps traders avoid rule violations.

Why fixed risk isn’t always optimal

1. Not all setups are equal
A textbook breakout may deserve full risk, while a counter-trend trade might call for half risk — even if both are valid. Flexibility allows for risk-weighted allocation.

2. Market conditions change
In volatile conditions, reducing risk protects capital. In clean trends, slightly increasing risk may improve returns. Fixed risk ignores context.

3. Trader psychology varies
Risk tolerance shifts with experience, confidence, and account equity. Forcing a rigid risk amount can lead to hesitation or overexposure.

4. Portfolio diversification
If you’re trading multiple instruments or strategies, flexible risk allows you to scale based on correlation, edge strength, and exposure balance.

How to apply flexible risk intelligently

• Use a risk range: Risk 0.25% to 1% per trade based on setup quality and market context.
• Classify trade quality: A+ setups get full risk, B-setups get half.
• Adjust for volatility: Use ATR or recent price swings to scale risk accordingly.
• Respect max daily loss: Even with variable risk, your total exposure per day should remain capped.
• Journal sizing decisions: Track whether your flexible sizing improves or hurts performance.

Fixed vs flexible risk comparison

Criteria	Fixed Risk	Flexible Risk
Simplicity	High	Medium
Emotional stability	Strong	Variable
Adaptability	Low	High
Analytical clarity	Easy to measure	Requires more tracking
Capital optimisation	Moderate	High (if used wisely)

Conclusion: Must you risk a fixed amount on every trade?

No — but you should have a defined framework for whatever sizing model you use. Fixed risk builds consistency, but flexible risk allows for intelligent adaptation. The best traders don’t size trades randomly — they adjust risk based on edge, conditions, and account objectives, always within clear boundaries.

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