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How much do you risk per trade?
1% - 3%... but it depends
Risk Awareness
You should NEVER risk money you cannot afford to lose. Always approach trading with discipline, caution, and an account size that you are personally comfortable with. Protecting your capital comes first, and smart risk management is the foundation of long-term success in the Futures market.
How Much Should You Risk Per Trade?
Different traders have different tolerances, with some choosing to risk as little as 0.5% of their account on each position. For our team, the preferred range is 1–3% per trade. This means your Stop Loss should limit your potential loss to no more than 3% of your total account value. For example, if you have a $10,000 account, your Stop Loss should be positioned so that you lose no more than $100–$300 if the trade moves against you. Whether the Stop Loss is 20 points away or 100 points away, the dollar amount at risk must remain within that 1–3% boundary.
Take Profit Targets
Take Profit levels can be more complex, but a common guideline is a 2:1 risk-to-reward ratio. Using the same example, if your Stop Loss represents 2% of a $10,000 account ($200), your Take Profit target would be set at 4% ($400). As you grow in your trading journey, you’ll learn how to scale out of winning positions, shift your Stop Loss to break-even or into profit, and manage trades dynamically to maximize gains while reducing exposure.
What Determines Risk Per Trade?
The Foxx Fund evaluates several factors when determining risk tolerance on each trade. Key considerations include the overall quality of the trade setup, market timing, volatility conditions, and additional criteria that help measure the strength and reliability of an opportunity. These elements guide how conservative or aggressive the risk allocation should be for any individual trade.
Margin Levels Explained
The boring stuff but important to know
Understanding Margin and Leverage
Your broker allows you to control large positions in the futures or forex markets with relatively small amounts of capital—this is called margin, and it provides the leverage traders use to potentially increase profits. In exchange, your broker requires that you maintain a certain amount of free, uncommitted cash in your account while trades are open. If your available margin drops too low, your broker will issue a warning, and if the situation worsens, your positions may be automatically closed.
Example of a Margin Call
Imagine you have a $10,000 account and you open multiple positions that require a combined margin of $9,500, leaving you with only $500 of available cash. If those trades move against you and your unrealized losses approach $500, the broker will begin to close your positions automatically. This is because you no longer have enough remaining equity to cover the losses—the $500 available equals the maximum the account can absorb before reaching the broker’s minimum margin requirements. In this scenario, even though you started with $10,000, risking $9,500 in open positions leaves you only $500 away from a forced liquidation.
Maintaining Healthy Margin Levels
It’s crucial to fully understand margin and keep your account well above minimum requirements. A general rule of thumb is to maintain at least 20% of your account balance as free, available margin at all times. For a $10,000 account, this means your total open positions should not exceed $8,000 in margin. Staying within this range helps protect you from unwanted stop-outs and keeps your trading account in a safer, more sustainable position.
