The standard recommendation from forex forums is to risk 1% of your balance per trade. For your own account, that's reasonable. For a prop challenge, it's often too much.
What "1%" really means
On a challenge, you have a strict drawdown limit. If it's 5% — 5 consecutive losing trades at 1% risk will blow your account. And statistically, a 5-loss streak happens to any trader at least once every 2–3 months.
1% vs 0.3–0.5% — comparison table
5 losing trades in a row is normal, not rare.
Any trader hits a 5-loss streak at least once every 2–3 months. If your risk is 1% and the DD limit is 5% — the streak will guaranteed blow the account. Calculate risk from the firm's limit, not from the balance.
Three sizing mistakes
Fixed $-risk instead of %
"I always risk $250" — on $25K that's 1%, on $100K that's 0.25%. After an upsizing, the strategy suddenly becomes aggressive or, conversely, useless. Calculate in percentages.
Trades without a stop-loss
"I'll set it later" = "I'll lose everything". On a challenge, the SL is set simultaneously with the entry. No exceptions.
Increasing risk after a winning streak
After 3 wins, it seems like you can "lock in momentum" with 2% risk. One loss at 2% often gives −3% for the day and violates the daily DD.
What to do next
On a challenge — fixed risk of 0.3–0.5% of the balance, SL set simultaneously with the entry, no increases after wins. On funded, after the first payout cycle, you can go up to 0.7–1%.