We review breached accounts every day, and one pattern accounts for more failures than every other rule combined: a position sized so large that its own stop-loss could never be reached. The 2% rule fires first, the account closes, and the trader writes to support convinced something malfunctioned. Nothing did — the arithmetic was decided at entry.
The rule being hit
No single trade on a Drift Fund account may lose more than 2% of equity, and positions in the same instrument count combined. On a $100,000 account that is roughly $2,000 of room per idea.
The mistake, in numbers
A real (anonymised) example: BTC at $78,485, a long of 2.55 BTC, stop at $75,000.
That stop sits $3,485 below entry. At 2.55 BTC, reaching it would cost about $8,880 — roughly 8.8% of the account. The 2% ceiling is ~$2,020, so the rule breaches the account when the trade is barely a quarter of the way to the stop. The stop was never a real stop; it was decoration.
The formula
Decide the stop first. Then:
size = (2% of equity) ÷ (entry − stop)
Same example done right: $2,020 ÷ $3,485 ≈ 0.58 BTC — not 2.55. The trade idea was fine; the size was four times too large for the stop it carried.
Three habits that make it automatic
- Stop first, size second. If you pick size first, the stop becomes fiction.
- Count the whole instrument, not the order. Three "small" BTC longs are one BTC position to the risk engine — because they are one position in reality too.
- Recompute after profits. 2% of equity grows as you grow. After a good week the formula gives you more room — take it from the formula, not from confidence.
Why we hold the line on this rule
Because it is the difference between a losing trade and a lost account. A trader who risks 2% per idea can be wrong ten times in a row and still be trading. A trader who risks 9% is three mistakes from zero — and no payout schedule can outrun that math.
The same arithmetic protects our capital when you are funded, which is why the rule never relaxes after passing. Size like the account is already funded, and passing becomes a side effect.