Position sizing
What Is the 2% Rule in Trading?
By MarketsBench · Published · 1 min read
Draft outline — the full guide is being written.
The 2% rule caps the amount you risk on any single trade at 2% of your account equity, so no individual loss can meaningfully dent the account.
How the 2% rule works
Draft to cover: risk amount = balance × 2%; position size = risk amount ÷ stop distance; why the cap is on risk, not position value.
2% vs 1%: which should you use?
Draft to cover: losing-streak math, why many traders halve it, prop-firm limits.
Worked example
Draft to cover: $10,000 account, 2% risk, entry/stop walkthrough.
Common mistakes with the 2% rule
Draft to cover: sizing from margin instead of stop distance; ignoring correlated positions; risking 2% on every one of five open trades.