Per-Trade Risk Limit
The rule that tells you how much you're allowed to lose on a single trade, one that ends your account if you don't listen.
What it is
A per-trade risk limit caps the maximum loss any single position can generate, typically expressed as a percentage of your account balance. FundingPips Zero, for example, enforces a strict 1% per trade rule, if any single position loses more than 1% of your balance, it's a violation and the account is terminated.
How it works in practice
On a $100,000 account with a 1% per-trade limit, no single position can lose more than $1,000. This constrains your position sizing directly: if your stop loss is 50 pips on EUR/USD, your maximum position size is 2 lots. Wider stop = smaller position. No exceptions, no wiggle room.
Important: some firms measure this per idea, not per position. If you open three positions on the same asset, they count as one combined exposure. Splitting a 3-lot trade into three 1-lot entries doesn't reduce your risk in their eyes, the total loss across all positions on that asset is what matters.
This is not the same as a daily drawdown limit. Daily drawdown caps your total losses across all instruments for the day. A per-trade/per-idea limit caps how much any single bet can cost you. You can stay well within your daily drawdown and still breach a per-trade limit with one oversized position.
Why it exists
Firms want to ensure traders aren't concentrating risk. A trader who risks 5% on a single "high conviction" trade is one bad call away from blowing half the drawdown limit. The per-trade cap forces diversified risk, you physically cannot lose more than X% on any one idea.
Who uses this rule
| Firm | Rule | Limit | If Breached |
|---|---|---|---|
| FundingPips | Per-idea risk limit + 1% floating loss cap | Per idea, plus daily drawdown in effect | Account terminated, no second chance |
The hidden cousin: auto-close
Here's the thing most traders miss: a per-trade risk limit and a floating loss auto-close are the same constraint expressed differently.
| Per-Trade Risk Limit | Floating Loss Auto-Close | |
|---|---|---|
| The rule | You must not lose more than X% on a single trade | We will close your trade if it loses more than X% |
| Who enforces it | You (via stop loss / position sizing) | The firm (automatic intervention) |
| If breached | Account terminated | Account survives, profit split reduced |
| The message | "Manage your risk or lose everything" | "We'll manage your risk, but it'll cost you" |
Same ceiling, different consequences. One trusts you to stay within bounds and punishes failure with termination. The other assumes you might not and catches you, at a price. Whether that price is fair depends entirely on how the firm structures it.