Risk management
How to win by not losing.
Most traders don't fail because they can't read a chart. They fail because one trade was too big on the wrong day. Here is the risk framework that gets people funded — and the calculator that does the maths for you.
- 40
- Trades your buffer should survive
- 2.5%
- Risk per trade, maximum
- 1
- Instrument at a time
Why traders fail
Four ways to lose an account, and the fix
None of these are trading problems. Every one of them is a risk problem with a mechanical solution.
Overleveraging
Risking 10% of the buffer on a trade because the setup looked certain. Six of those in a row — a completely normal streak — and the account is gone.
The fix: Size every trade off the drawdown buffer so you can be wrong 40 times.
No backtested data
Trading a setup you have never measured. You cannot manage risk on an edge you cannot describe in numbers.
The fix: Prove the setup on historical data before you pay an evaluation fee.
Ignoring the firm's rules
A daily loss limit and a trailing drawdown are two different things, and each one ends the account on its own terms.
The fix: Know both numbers before your first trade, and trade to the tighter one.
Revenge trading
The loss that ends an evaluation is almost never the first one. It is the third trade taken in ten minutes to win the money back.
The fix: A hard daily stop, set in the platform, that closes the day for you.
Do the maths first
Your position size, calculated
Enter your firm's drawdown buffer and your stop. This tells you how many contracts you can hold and how many losing trades you can survive.
Position sizer
Size for the buffer, not the balance.
A “$50,000 account” with a $2,000 drawdown is a $2,000 account. Enter the buffer.
Your numbers
Trade size
2
contracts of MNQ
- $40.00
- Risk on this trade
- $50.00
- Target risk
- 50
- Trades in your buffer
- $120.00
- Suggested daily stop
Survivable. You can be wrong 50 times in a row and still have an account. Stop for the day at $120.00 down and the maths stays on your side.
Educational tool, not financial advice. Contract specs are CME standard and exclude commissions and slippage — your real risk per trade is slightly higher. Always confirm the drawdown rules on your own firm’s site.
The framework
Six rules that pass evaluations
Passing an evaluation is a maths problem, not a trading problem. Follow these in order and the target takes care of itself.
Size for 40 trades, not 4
Divide your drawdown buffer by 40. On a $50k account with a $2,000 buffer that is $50 of risk per trade. It will feel painfully small — that is the entire point. A trader risking $50 survives an eight-loss streak with 80% of the buffer intact. A trader risking $400 is out.
Set a hard daily stop
Three losing trades or 20% of your buffer, whichever comes first — then close the platform for the day. Put it in the platform as a real limit, not as a promise to yourself. Every blown evaluation traces back to a day the trader kept going.
Know which drawdown you're on
An intraday trailing drawdown follows your unrealised peak, so a trade that goes +$800 and closes at +$200 permanently tightens your buffer by $800. An end-of-day drawdown only recalculates on the closing balance and that same trade costs you nothing. Pick end-of-day if you let winners run.
Respect the consistency rule
Most firms cap how much of your total profit may come from a single day — commonly 30% to 50%. Work out your cap before you trade: target profit × the consistency percentage. Stop for the day once you approach it, or the payout gets held even though the account is green.
One instrument, one session
Trade one product and one window — the first two hours of the New York open is enough. Every extra instrument multiplies the number of ways you can be surprised, and correlated positions on ES and NQ are one trade with double the size, not two trades.
Count forward to the target
A $3,000 target at $50 risk and a 1.5R average winner needs roughly 40 net winning trades. At four trades a day and a 45% win rate that is three to four weeks. Now you have a schedule instead of a hope — and no reason to force size.
The survival table
What each risk level actually buys you
A losing streak of six to eight trades is normal for a profitable strategy. Read this table as: how many of those can you take before the account is dead?
| Risk per trade | Losses to zero | Survival odds | In practice |
|---|---|---|---|
| 1% | 100 trades | Very high | Slow but nearly unbreakable |
| 2.5% | 40 trades | High | The sweet spot for most evaluations |
| 5% | 20 trades | Moderate | One bad week ends it |
| 10% | 10 trades | Low | A normal losing streak kills the account |
| 20% | 5 trades | Almost none | This is gambling, not trading |
Before the session
The four numbers you write down first.
- 1My risk per trade, in dollars — not in contracts.
- 2My daily stop, in dollars, entered in the platform.
- 3My remaining drawdown buffer as of this morning.
- 4My consistency cap: target profit × the firm's percentage.
Stop trading when
Any one of these is true.
- You have hit your daily stop. The day is over, win or lose.
- You have taken three losses in a row, whatever the dollar total.
- You are about to break your consistency cap on a green day.
- You are trading a setup that is not on your written list.
FAQ
Risk questions,
answered straight.
Every firm words its drawdown rules differently. If yours is unclear, send it to hello@letsgofunded.com and we’ll read it with you.
Between 1% and 2.5% of your drawdown buffer — not your account size. On a $50,000 account with a $2,000 buffer that is $20 to $50 per trade. The goal is to survive a losing streak of eight, which every trader gets several times a year.
Whichever you will hit first, which is almost always the daily loss limit. Trade to the tighter of the two numbers. Blowing the daily limit ends the account just as permanently as blowing the total drawdown at most firms.
On a static or end-of-day drawdown, yes — profit rebuilds the cushion. On an intraday trailing drawdown the floor has already followed you up, so the room you lost never comes back. This is the single biggest reason to prefer end-of-day.
As many as your stop allows within your risk budget, and no more. Use the calculator above: risk budget divided by (stop in ticks × tick value). If the answer is less than one contract, trade the micro version of the same product rather than widening your risk.
No — it keeps you alive long enough for an edge to pay. Risk management without an edge just loses money more slowly. That is why backtesting comes first, and why the tools page exists.
Next step
Now pick a firm whose rules
fit how you trade.
The right drawdown type does more for your survival odds than any indicator. We list it for every firm, alongside the daily loss limit and the consistency rule.