I'm wondering if anyone can help me answer a very fundamental question concerning the percentage risk in an account. Basically you hear time and time again that professional traders only risk 1% to 2% of their account on any one trade. At first I took this to mean that in each market they trade (lets say they trade 10 separate markets in their account) they risk 1% in each position in each of the 10 markets (i.e. an actual 0.1% of total account equity) adding up to a total of 1% total risk in the account. Now I am wondering if they really meant something more like risking 10% in each position in each of the 10 markets (i.e. an actual 1% of total account equity) adding up to a total of 10% risk in the account. Which one is the correct interpretation? (1%*1/10th of the total account)*(10 markets)=1% total risk. OR (1%*total account)*(10 markets)=10% total risk. I am inclined to think that it is the one on the bottom here as it would seem that a stop limit of 1% in a singular market would not be enough room to breathe especially if you were using any type of significant leverage. In my testing I have found that my percentage stops should have some relationship to the amount of leverage being used. While this relationship seems to work well on an individual basis I do know that creeping towards 10% total portfolio risk seems to be a little too risky. I am just wondering solely from a money management point of view what is considered reasonable. Is 5% or 10% total outstanding risk in a diversified account a totally risky amount? Am I wrong about 1% not pertaining to total account risk? Any advice anyone could give would be much appreciated as always. Thanks.