Let’s be honest—most traders didn’t get into this game because they love math. But here’s the truth: if you want to be consistently profitable, this is the math you need to master. It’s not complicated. It’s not intimidating. And it has nothing to do with calculus or fancy algorithms.
It is the only math that matters in trading. It’s what separates amateurs who blow up their accounts from professionals who play the long game—and win. Master these four numbers, and you’ll never look at the market the same way again.
1. Position Size: 10% of Your Account
This is about trade allocation, not risk. Good traders never dump their entire account into one position. Instead, they cap their position size at 10% of their total account. If you have $10,000, that means putting no more than $1,000 into any single trade.
At a firm like Axi Select, that $1,000 can go a long way. With access to 100:1 leverage, you’re controlling $100,000 worth of capital with just $1,000 on the line. That kind of buying power can produce explosive gains—or devastating losses.
That’s why smart traders handle leverage like a sharp blade: with caution and respect. Leverage is a double-edged sword. It can multiply your profits, yes—but it can just as easily compound your losses. That’s why position sizing and strict risk limits are so important. You’re not just trading your account—you’re managing exposure far beyond your deposit.
2. Risk Per Trade: Never More Than 1%
This is the golden rule of survival. No matter how confident you are, the maximum you should lose on any one trade is 1% of your account. For a $10,000 account, that’s just $100. Why? Because even if you lose five trades in a row, you’re still down only 5%—and you’re in the game long enough for your edge to pay off. This simple rule protects your capital and your mindset.
3. 50% Win Rate with a 1:2 Risk-Reward Ratio
You don’t need to be right most of the time to be profitable. If you win just 50% of your trades but make twice as much on your winners as you lose on your losers, the math works beautifully in your favor.
Let’s say you take 10 trades:
- 5 wins × $200 = $1,000
- 5 losses × -$100 = -$500
- Net profit: +$500
That’s the power of risk-reward. You can be right half the time and still come out ahead.
4. 70% Win Rate with a 1:1 Risk-Reward Ratio
Many day traders prefer aiming for base hits—frequent, smaller wins with one to one risk reward that add up steadily. This approach is especially popular among prop traders, who are often evaluated on consistency, discipline, and capital protection. Rather than swinging for home runs, they focus on high-accuracy setups with minimal drawdowns.
A strategy with a 70% win rate and a 1:1 risk-reward ratio can be surprisingly effective.
Here’s how it plays out over 10 trades:
- 7 wins × $100 = $700
- 3 losses × -$100 = -$300
- Net profit: +$400