> ## Documentation Index
> Fetch the complete documentation index at: https://www.questforedge.io/llms.txt
> Use this file to discover all available pages before exploring further.

# Blowing an Account with 5% Risk

#### Objective

To evaluate how different risk levels affect account equity during a typical losing streak.

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#### Setup

* Initial capital: \$10,000
* Risk per trade: 1%, 3%, 5%
* System: positive expectancy
* Scenario: 15 consecutive losses

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### Equity Evolution Under Different Risk Levels

**Figure — Impact of risk over 15 consecutive losses (1% vs 3% vs 5%)**

<figure>
  <img src="https://2796896876-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F6AtsriCICzb0FJBa93xR%2Fuploads%2F7oZlFJM0X4Z7qBFHaDnL%2Foutput.png?alt=media&token=09dd5069-f31b-45e5-9978-8648ac43ddf7" alt="" />
</figure>

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### Results

After 15 losses:

* **1% risk → \~ -14% drawdown**
* **3% risk → \~ -36% drawdown**
* **5% risk → \~ -53% drawdown**

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### Interpretation

All systems experience the same sequence of losses.

The difference in outcome is entirely driven by **risk per trade**.

As risk increases:

* Losses compound faster
* Drawdowns deepen non-linearly
* Recovery requirements increase significantly

At 5% risk, the account loses more than half its value under a normal losing sequence.

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### Key Insight

Risk determines whether a system is:

* **Robust** → able to withstand variance
* **Fragile** → vulnerable to normal fluctuations

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### Conclusion

Even with a positive expectancy system:

> High risk can prevent long-term profitability by amplifying normal losses into critical drawdowns.

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### Next Step

→ *How Much Should You Risk Per Trade?*