What is the 1% risk rule and how do I apply it?

The 1% rule: never risk more than 1% of your total account on a single trade. If account = ₹1,00,000, max risk per trade = ₹1,000. Position size = Risk Amount / Stop Loss in Points.

Example: Account ₹1L, risk 1% = ₹1,000. Stop loss = 50 points on Nifty. Contract value per lot = 50. Number of lots = ₹1,000 / (50 × 50) = 0.4 → round down to 0 lots. This shows why you need adequate capital for proper sizing.