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What is the 1-2% risk rule in forex trading?

The 1–2% risk rule limits the amount of account equity risked on a single trade. For example, with a $10,000 account, risking 1% means $100, while 2% means $200. This conservative approach prevents catastrophic losses and allows traders to survive losing streaks. While small risks may seem slow to grow accounts, they provide longevity and consistency. Professional traders emphasize this rule as a foundation of money management. It helps control emotions and ensures sustainable performance even in volatile forex markets.