What is the maximum loss on a single trade that wouldn't cause a complete mental breakdown?

Many people verbally say they "can accept stop-losses."
But when it comes to the actual trading, it often goes like this:
Lost 20 U: Can still calmly joke about it
Lost 200 U: Started to frown, the frequency of watching the market doubled
Loss of 2,000 U: heart racing, hands starting to shake
Lost to 5,000 U: The person hasn't been liquidated, but their mindset has already collapsed.
Then a series of familiar plots will follow:
The originally set stop-loss has started to move down.
Clearly, it should be closed, yet it is stubbornly held on.
While saying "technology is important," they are frantically clicking with a completely uncontrolled mindset.
So the question is not:
"Are you willing to cut losses?"
but rather:
"To what extent can this order lose money before you can still execute it with a clear mind?"
In today's article, we will clarify this matter.
How much should one lose in a single trade to avoid losing their mindset as well?
How do most people ruin themselves without any limits?
A set of "single loss limit template" that you can use right now.
1. No matter how good the technology is, if it can't overcome the "psychological limit", it's all in vain.
You can start by asking yourself a question:
Think back to your recent trades that were the most painful, most intense, and when you most wanted to turn the situation around.
What really drives you crazy, is it losing a few points? Or losing how much money?
The real answer for most people is:
"It's not just a matter of dropping a few points; it's that the absolute amount of that transaction is too large."
"When I lost that much, I just lost it."
That is to say:
The graphics are understandable, and the logic is clear.
What truly ruins you is that moment when you have exceeded the amount you can bear.
A single loss is too big; the problem is not just that the money is gone:
You will start to doubt your own system.
You might subconsciously think:
"I need to quickly make back this loss."
All your operations next,
Will be led by this loss.
At this point, discussing technology and systems is actually meaningless—
People have collapsed, skills have become obsolete.
Second, don't ask "How much can I earn at most?" Instead, ask:
"What is the maximum amount I can lose in one trade without losing my mind?"
This number is actually yours.
Single Transaction Risk Limit
。
Most people who "live long" have a very simple bottom line:
A single trade can lose a maximum of 1%–2% of the total capital.
You might think this ratio is "pitifully small,"
Especially when the principal is not large, it seems even less.
But first, let's do some calculations👇
Assumption 1: You use the strategy of "losing 10% on each trade"
Funds: 10,000 U
Each loss: -10% = -1,000 U
As long as:
Consecutively wrong 3 times: you go from 10,000 → 7,000
Consecutively wrong 5 times: directly drops to 5,000
This is just a "normal consecutive error".
It's not that you're losing more and getting more obsessed, the more obsessed you get, the more you increase your position.
The key is:
Each loss is 10%.
Every time a stop loss is triggered, a piece of your mentality is being painfully ripped away.
It is difficult for you at this intensity,
Maintain the status of the "calm execution system."
Assumption two: You use the strategy of "losing 2% on each trade"
Same funds: 10,000 U
Maximum loss per transaction is 2% = 200 U
Consecutive errors 5 times: loss 10%
Consecutive 10 mistakes: loss of 20%
You may feel uncomfortable, but —
Still within the adjustable range
You have time to adjust strategies, fix systems, and adjust mindset.
You still have the right to say, "I will continue to practice."
This is the difference:
A 10% cut is like kicking you directly off the mountainside.
2% is like a knife that allows you to stumble on the mountain road, but not roll all the way down.
3. Why do I suggest beginners limit their "single transaction risk" to 1%–2%?
It's not that I'm conservative, it's that you really can't handle a faster pace right now.
There are three reasons 👇
1) Your technology is currently unstable, and you are bound to make consecutive mistakes.
In the first one or two years after entering the market, you will inevitably encounter:
Emotional trading
The new system hasn't been fine-tuned yet.
Deviation in understanding the market
Let's set aside high-frequency, complex, and flashy strategies for now.
Light is:
The stop loss was set too early.
The stop-loss was set too late.
What should be empty is empty, and what should be more is not more.
These basic mistakes,
is enough to make you
Made several mistakes
。
Individuals with high single transaction risk:
If you make 2 mistakes, it starts to crash.
When you make 3 mistakes in a row, you start to doubt your life.
Individuals with low single transaction risk:
Even if I make 5 mistakes, I can still handle it.
There is space to slowly correct, rather than giving up and leaving after just one or two attempts.
2) Your mindset hasn't been trained enough to handle the ups and downs.
You can imagine two scenes:
Screen A:
A single loss of 3,000 U
You stare at your phone, unable to speak for half an hour.
That night I basically didn't sleep.
Scene B:
A single loss of 200 U
It will be uncomfortable, but I can still eat normally and review normally.
Which scene is more like what you can endure for a long time?
This is the psychological cost brought about by the difference in single transaction risk.
Losing too much in a single transaction is not just a matter of money.
But you will start to fear "again".
Entering a death spiral of "messing around → big losses → fear → messing around again."
3) If you want to play with compound interest in the future, the prerequisite is - don't blow up the principal first.
What is the premise of compound interest?
Principal is
Mindset is
The system is
As long as these three things exist, you have a future.
A loss too big hurts:
Principal: The amount visibly shrinks.
Mindset: You start to hesitate in executing stop losses and entering the market.
System: You start to question everything, wanting to start over, wanting to change, wanting to tear it down.
This is why I say:
"If you can't control a single loss well, talking about technology and compound interest is just self-deception."
4. So how should it be determined specifically? Here’s a method "to work backwards from actual combat".
Let's do one.
You can directly copy the configuration template.
。
Assume:
Your trading funds are
10,000 U
(The numbers can be changed, but the logic remains the same)
Step 1: First set the "single transaction loss limit"
Suggestion:
Novice / In the literacy phase: 1%–2%
A little more mature: 2%–3% (going higher is very dangerous)
Take 2% for example:
Maximum loss per order = 10,000 × 2% =
200 U
👉 This is the "psychological and financial limit cost" of your order.
Step 2: Determine "Where is the technical stop loss for this order?"
For example, what you are doing is contract / spot trading:
What you value is a certain
Support Level / Structure Level
What do you think:
"If it falls below here, it means I judged incorrectly this time."
If:
Entry Price: 100
Technically reasonable stop-loss: 95 (admit mistake if it drops 5%)
So:
Stop-loss distance = 5%
Maximum loss per transaction = 200 U
👉 This order's
Maximum nominal position = 200 / 5% = 4,000 U
That is to say:
No matter how optimistic, excited, or FOMO you are,
The maximum position for this order is 4,000 U.
More than that is breaking your own bottom line; it's not that "the opportunity is good," it's that "the urge to act impulsively has struck."
Step three: Conveniently "tie up" the leverage and margin as well.
If you are playing with contracts:
You plan to use 2x leverage:
Nominal Position 4,000 U → Margin 2,000 U
You plan to use 4x leverage:
Nominal Position 4,000 U → Margin 1,000 U
But no matter how many times,
The bottom line of this order "losing a maximum of 200 U" cannot be changed.
Note the order:
First determine how much to lose, then decide how large of a position to open,
Absolutely not the other way around: first maximize the position, then see how much it will lose.
5. So what if the principal is very small, and 1%-2% feels "meaningless"?
This is the place where many small investors and beginners are most likely to get tangled up:
"Teacher, I only have 2,000 U,"
1% is 20U,
What is the point of doing this?
It sounds heart-wrenching, but I must speak the truth:
A small principal does not mean that the risk ratio for a single transaction should be increased.
Your ability to bear risk is limited.
What you need more now is "live longer + learn steadily"
The principal is small, which only indicates:
Pull 1%-2% up to 5%-10%,
It's not "improving efficiency," it's "accelerating the clearing."
Your main goal in trading right now should be: practice, not a quick turnaround.
Practice: Execution Power
Practice: View images, place orders, set stop loss, review trades
Practice: Stay alert in the fluctuations.
When the principal is small, every dollar lost is worth more than in the future.
Now every time you lose 100 U, it hurts your heart.
In the future, when your funds grow larger, this kind of "heartache" will become more costly.
The earlier you control losses meticulously, the more likely you are to grow.
In simple terms:
The smaller the principal, the less you should be willful.
Instead of saying, "It's only a little money, so I'll take a chance."
6. Give your "easy-to-execute at a glance" simple rules
You can write the following points directly in your trading notebook / next to your screen:
Maximum single loss = 1%–2% of total account funds
Any stop loss exceeding this number will be regarded as a "violation order".
You must answer three questions before placing an order:
What price is my technical stop loss at?
What is the approximate distance in points from entry to stop loss?
According to the maximum loss of X U per transaction, what is the maximum nominal position that can be opened for this transaction?
Stop-loss means planned losses, revenge doubling is not allowed.
After being stopped out, it is not allowed to immediately double down in the opposite direction.
After a single loss reaches the limit on that day, you must remain in a flat position and take some time to calm down.
As long as one loss keeps you up at night, you must reduce your position next time.
This is the signal your body is giving you:
"This amount, you can't psychologically bear it."
Next time use a slightly smaller number,
Adjust yourself back to a range where you can function normally.

------------
That is why I repeatedly emphasize this sentence:
How much should be the maximum loss for a single transaction?
Wouldn't that lead to a complete breakdown of the mindset?
The standard answer is not with me.
In your own true reaction to the "loss number".
I just give you a
Baseline Range
：
The vast majority of ordinary people,
Control single transaction losses at
1%–2%
It feels good, yet it doesn't lead to an explosive mindset.
The rest is for you to face honestly yourself:
Which number will make you start not sleeping?
Which number makes you want to get your money back right away?
Which number will make you start regretting "Why did I take such a large position?"
Keep losses within a range that "won't destroy your execution ability."
That's what it really means to trade, rather than to gamble.
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