The 1% rule is the single most important risk management principle in prop firm trading. Here is why it works and how to apply it — especially under tight challenge rules at firms like Topstep, Apex Trader Funding, and My Funded Futures.
What Is the 1% Rule?
The 1% rule states: never risk more than 1% of your account balance on any single trade.
For a $100K account, that is $1,000 maximum risk per trade.
Why It Matters for Prop Firms
Prop firm challenges have strict drawdown limits. The 1% rule keeps you safe:
| Account Size | 1% Risk | Trades to Hit Drawdown (4%) |
|---|---|---|
| $25,000 | $250 | ~16 consecutive losses |
| $50,000 | $500 | ~8 consecutive losses |
