That is why if one follows the advice: Trade small and trade often, a small retail trader will blow up his account eventually but his broker will get rich.
I as well risk less 0.75 %, but one has to define you one's own rules that define risk, most on forum who still use archaic measures to define risk will see it as they used what is in books or whatever they deem fit for their back testing. You can only back test so much and trading forward can seldom show enough viable sample size to know for sure it you are on right direction of being ultimately right in one's desired path.
I'm going to say that your instructor meant the former. Its impossible to only spend 1% on a purchase unless you started off with a huge account. Risking 0.5 - 1% on a trade is pretty standard risk management, btw its definitely possible to risk 1% to make 3 - 5%, just don't expect a 90% win rate to go with that.
You seem to be the first one in this thread to "get it". Nice walkthrough for beginners. While nothing in trading is set in stone many overleveraged people who are a stone throw away from bankruptcy would be advised to at least follow an approach such as the one you described. It's amazing how some people on this board (I even saw a self proclaimed previous professional) think the 1% sizing "rule" pertains to a position size of 1% of the account and then moan how such approach does not make sense.
A lot less ridiculous than frequently putting at risk 10 or 20 or 100% of the account balance. The correct approach as described by @Metamega makes a lot of sense actually. It is not the absolute percentage amount that is key here (choose whatever amount you are comfortable with) but the process.
Do yourself a favour and study risk of ruin in trading. Typically the general newbie advice of 1-3% of risk until stopped out prevents most blowups, but not death of thousand cuts. Only meaningful on large accounts in relation to total equity. It's boring but the largest traders try to risk much less than 1% of total account! But depend on overall rules, so possible to risk more on some type of trades. When you can avoid ruin you can start improving overall performance. Of course you risk much more if stops don't work so no silver bullet.
Agree and may I add couple additional points: * Without edge one blows up sooner or later, regardless of risk, taken. Edge has to come first, before any risk management considerations. Many market practitioners on the retail side state that risk-management in itself is an edge, and the ability for retail traders to sit on the sidelines and/or size positions as function of opportunities quickly (faster than professionals) is an edge. Well it is but that is an edge only if the underlying mechanics of the trade has an edge. Without an edge that produces statistically profitable aggregate trades it does not matter whether one risks 0.5% or 10% off account balance on each trade. * One has to decide why one is in the market. For the excitement or to make money. To ensure survival over a long period of time may I suggest trading can be very boring. I enjoy the process of discovering new ideas and testing ideas and implementing them a lot more than the actual trading process. So much more in fact that I automated most of my strategies and let computers decide how and when to trade. If one is in this for the excitement then one will necessarily have to trade larger than prudent position size. While that delivers more excitement to some (to me it gives me the shivers), it also highly inflates risk of ruin. One has to come to terms with what one wants to get out of the markets as Ed Seykota put it so succinctly.