A risk plan for prop firm accounts: the risk ladder and cutting size after losses

Position size is the decision that destroys the most prop firm accounts, and it is almost always made at the worst moment: after two losses, or after a good week. A risk plan takes it out of the moment and fixes it before the session. This guide explains the one we use in Jornalo, with its numbers, so you can copy or adapt it.

Why "risk 1%" means nothing in a prop firm account

The classic rule says: risk 1% of the account per trade. In your own account it works because the balance is real capital. In a prop firm account it is not: a $50,000 account with a $2,500 trailing drawdown has $2,500 of real capital, the cushion to the liquidation threshold. That 1% of the balance is $500, which is 20% of the cushion: five losses in a row and the account no longer exists.

That is why the starting point of any prop firm risk plan is not the balance, it is the maximum drawdown. If you are not sure how yours moves, read how trailing drawdown works first.

Base R: a fraction of the drawdown

We call base R the risk per trade you start with, and we define it as a fraction of the maximum drawdown. The original template is built for a $100,000 account with a $5,000 drawdown and a base R of $400: 8% of the drawdown. At that size you need twelve consecutive losses to reach liquidation without cutting anything. Applied to common accounts, rounded to comfortable figures:

Drawdowns are September 2026 reference values; check your own account. Notice that the base R of an Apex 50K is $200, not $500: if your usual ES stop is 8 points ($400 per contract), that account does not let you trade a single ES. It does let you trade five MES.

The ladder: risk rises with banked profit

Base R is the first rung. From there the plan is a ten-rung ladder: each rung has a larger R and unlocks when the profit banked above the starting balance reaches that same R. Put differently: you never risk more per trade than you have already made, except for the base R, which comes out of the drawdown. The 100K template:

For any other account the whole ladder scales from its base R with the same ratios (1×, 1.5×, 2.5×, 3.75×… up to 37.5×). With a $200 base R, rung 2 is $300 and unlocks with $300 of profit; rung 5 is $1,250 and requires $1,250 banked.

Cutting size after losses: shots

The ladder says how much to risk when things go well. The reduction says what to do when they go badly. We count shots: consecutive losses since the account's last high. The first three shots go at full size; the fourth through eighth at 75%; from the ninth on, at 50%. The counter resets to zero as soon as the balance makes a new high. With a $200 base R and a $2,500 cushion:

Without reduction, twelve consecutive losses liquidate the account. With reduction it takes nineteen. The point is not that you will string nineteen losses together: it is that runs of five or six, which do happen, stop being fatal, and that size drops precisely when your judgment is worst.

The daily limit rules

If your account has a daily loss limit, that limit is the session's maximum R budget. A Topstep 50K with a $1,000 daily limit and a $150 base R allows at most six shots in a day, fewer if you were already in reduction. But the firm's maximum is not your maximum: setting your own cap of two or three shots per day keeps a bad day from becoming the day the account ended. The cushion you really have today is the smaller of the two: the daily one and the drawdown one. The drawdown calculator returns it with both limits applied.

From R to contracts

R is money; the order is sent in contracts. The conversion is always the same: risk per contract = stop ticks × tick value (plus commissions), and contracts = R ÷ risk per contract, rounded down.

• R $200, MES with an 8-point stop (32 ticks × $1.25 = $40): 5 contracts.
• R $200, ES with the same stop (32 ticks × $12.50 = $400): 0 contracts.
• R $200, MNQ with a 30-point stop (120 ticks × $0.50 = $60): 3 contracts.
• R $200, MCL with a $0.40 stop (40 ticks × $1 = $40): 5 contracts.

The position size calculator runs this for any CME contract and includes commissions; the guide to futures position sizing explains why the chart structure sets the stop and the size adapts to it, never the other way around.

Taking the decision out of the moment

The valuable part of the ladder is not its numbers, it is that it removes the real-time sizing decision. Before the session you know your rung, your shot count and the size of the next trade in contracts. During the session you only execute. For it to work:

1. Write the plan with its numbers in your journal and do not change it within the week.
2. Log the risk of every trade in R, not just the result in dollars.
3. Review the plan weekly: if your real average stop is wider than planned, the base R was fiction.
4. When you pass the evaluation, go back to rung 1: the funded account starts again from zero cushion.

Frequently asked questions

Why 8% of the drawdown and not another number?

Because it leaves about twelve consecutive losses before liquidation without cutting size, and quite a few more with the reduction active. It is not sacred: a high-variance trader can go down to 5%, and one with a very reliable stop can go up to 10%. What matters is that it comes from the drawdown, not from the nominal balance.

When do I go back to full size after cutting?

When the balance makes a new high. Shots are counted from the account's last high: as soon as you exceed it, the counter resets to zero and you return to the ladder rung your banked profit entitles you to.

Does the ladder work for funded accounts, not just evaluations?

Yes, and that is where it pays off most: in a funded account banked profit is money you can withdraw, and the ladder turns it into size in an orderly way instead of on impulse after a good week.

Next step

Compute your base R from your account's drawdown, convert it to contracts with the position size calculator and, if you trade several accounts at once, read how the consistency rule changes the plan when payout time comes.