Every trader asks how much to risk per trade. A backtest that shows 1,000× growth at 10% risk looks tempting until you see the drawdowns behind it. We ran a Monte Carlo simulation on four years of rule-based gold trades to answer the question with numbers rather than opinions.
How the test works
We took the model's actual trade results from July 2022 to September 2026 and reshuffled them into 20,000 random sequences. Each sequence is a version of the same four years with the wins and losses arriving in a different order. We then measured final growth and the worst peak-to-trough drawdown at each risk level. We ran it twice: once with the backtest edge, and once assuming live trading is only half as good.
The results
| Risk per trade | Typical growth | 1-in-20 worst drawdown | Typical growth (half edge) | 1-in-20 worst drawdown (half edge) |
|---|---|---|---|---|
| 1% | 2.4× | 10% | 1.6× | 15% |
| 2% | 5.7× | 19% | 2.6× | 29% |
| 5% | 56× | 41% | 8.4× | 59% |
| 10% | 1,227× | 67% | 31× | 86% |
At 10% risk with a realistic edge, 90% of the runs went through a drawdown of more than half the account. That's the point where most people turn the system off, usually just before it recovers.
Why high risk breaks good systems
- Losing streaks are guaranteed. With a win rate around 40%, runs of 7–12 losses happen over a few years. At 10% risk, 12 losses in a row is a 70% drawdown.
- Recovery is asymmetric. A 50% loss needs a 100% gain to get back to even.
- Execution gets harder. Bigger positions mean more slippage, and at very large balances many brokers cap order size.
What we recommend
- 1% per trade as the default. The worst realistic drawdown is around 10–15%.
- 2% maximum on a personal account, and only after live results match the backtest for a few months.
- 1% on prop-firm funded accounts, where daily loss limits and per-trade caps apply.
Your edge decides whether you make money. Your risk decides whether you're still trading when it does.
See the model's drawdown history on the performance page, or read how risk changes prop-firm pass rates.
Trade the tested model
Use the same rule set as live signals, an MT5 indicator or a fully automated MT5 EA.
Figures in this article are hypothetical backtest and simulation results. Trading involves substantial risk. This is educational content, not financial advice. See the risk disclosure.