You make a good point. I think every strategy is different and to apply a 1% across the board may not always work. I think every setup must be evaluated by looking at stop to target ratio and what profit that ratio will give relative to draw downs etc. Setting at 1% could be to much or to little depending on how a particular strategy behaves. I typically have very different stops and targets for my shorts and longs for example because they behave differently.

You can go broke losing 1% at a time if your stops are always being hit.

For me, I had to deal with accepting that on every trade there was going to be the initial risk, the initial reward expectation; the developing risk and eventual reward. All I could do was control the initial risk and set in place my expectation of the reward. This allowed me to take the trade.
After that, I only had control over the developing risk. The eventual reward was more of a desire until the point I let go of the trade. The reasons I closed out my trade had more to do with my primary desire to preserve capital, and then once it was possible, my continuing desire to make a profit. My ultimate desire was to make at least a 1:1 with my initial risk, and then my wishful desire was to have the market supply me with a 4 to 1 profit reward on every trade.
At some point in my trading what I desired and what I was able to achieve were miles apart. As these got closer and closer, I began to realize that I could make a profit if I accepted what I was able to do most of the time. Sometimes I can make a profit on 10 trades in a row. Bam, bam, bam...
I said a profit. How much profit is the next question. For me, that is 4 ticks. My desire is 40 ticks per trade, but the reality of my ability is 4 ticks per trade 8 out of 10 trades.
Once I understood this, I reduced my risk per trade to as low as possible so that once I had accumulated some profits for the day, I could accept more risk in the trade. The way I accepted more risk was allowing it to go against me a bit longer. I said a time thing, not a price thing. For me, if price remains ticking back and forth within a tight spread, and slowly inches its way in the wrong direction, then time is against me, and I view it as an effort to keep as many contracts on the table in the wrong direction as possible and entice more orders being placed in the wrong direction. So, I can remain only if I am willing to accept a bit more risk. I increase my risk because I will stand my ground and challenge the market to comply with my desire since it costs me nothing additional except for time. The money I make is mine only when I leave the table.
In my experience, managing the risk and the reward in the trade is what separates most winners and losers. Most trades entered, at some point, have reward. Also, most trades entered at some point have loss. They also have a point where the trader can elect, (yes, you can chose) to make a profit, or allow it to not make a profit; or let it turn into a loss. So, for this and a few other reasons having more to do with steady withdrawals for income, I trade with a risk of one quarter percent per contract traded. The lower this number, the better I feel.
I do not know what most traders tolerance is. But if I were to describe myself, I would say I am a very defensive trader. I look for serious interest at key areas, and my tolerance for increased risk is very low. I will just surrender my contract at the first BE opportunity and wait for the next trade. This means that when I enter a trade I enter because I see a solid commitment of the price bracket to expand in my direction at least 1 more bar or 6 more ticks, or whatever size my first target is +2 ticks (one to get in, one to get out). If price starts to play games, I do not challenge it. I get out and wait for the next opportunity. Since my charts are price, not time, based, when I add time to it, I am increasing my risk.
So, once I accepted my risk profile, I was able to understand my reward profile, and actually make a profit many more times than not. I still desire the risk reward ratio of 4:1, but I trade to make money on a daily basis, one trade at a time. On every trade I take the risk I can accept. I get out when it falls beyond my tolerance level or I hit my reward level. Sometimes, I get the full reward I desire.
For every trader there is the theory and there is the reality of what that trader can do on a consistent basis. There is no correct answer. I do not have the answer for anyone except myself. I cannot say your thinking is wrong or right. All I can do is tell you to keep a detailed record of your observations about your trading with particular emphasis on your thoughts and reactions to loss and gain, and come to understand your risk and reward levels. There are many suggestions and recommendations available all over the place. Pick a point and go with it. IF anything, do not expect to change the nature of the market. At its core, the market is a risky place where reward can only be achieved if we come to an understanding of our risk tolerance and find a way to overcome its inherent negative conotation.

Monpere, et al.

A conclusion that can certainly be drawn from our discussion is; the whole question of risk management is far from an objective subject. You need at least one subjective piece of the puzzle to put it together, and that is an individual’s tolerance to risk. Now that is subjective, meaning there is no rule that says how risk averse you should be. That is an integral part of your emotional makeup.

The problem is, human nature does not operate to maximize gain, but rather to maximize the chance of gain, i.e., maximize the the number of winning trades, and minimize the number of losing trades. The result is, not only is risk controlled, but profitability is also controlled. In other words, playing it safe can be just as bad as taking too much risk, because you are not optimizing your winning trades nor the days with expanded ranges.

Sure, it's possible to devise trading schemes based on very short-term price swings that will on average be profitable. However, the average profits on individual trades from such methodologies are miniscule, and the trades they generate are so frequent that it not feasible to scale these strategies. If you look at it from a (modern portfolio theory) point-of-view, you can think of the trading profit on any given trade, as the compensation you receive for the risk you took on the trade. In a sense, the market demands a premium from the trader for taking less risk, which is of course, reduced profitability

As Michael Moubassin pointed out above, "Substantial empirical evidence shows that price changes do not fall along a normal distribution. Actual distributions contain many more small change observations and many more large moves than the simple distribution predicts." The ramifications of this observation are that not all markets should be treated the same and not all trades should be treated the same. The individual days and individual trades, which I like to call "special" must first be recognized and then they must be taken advantage of to the fullest extreme. It is far worse to miss taking advantage of a special trade than to make a bad trade, and it is just as bad for your P&L to fall into it's normal distribution of returns, on a day with 3XATR, as having a bad day.

Traders take risk, in the sense they routinely make judgements whose outcomes are uncertain. So it would follow then, that good traders don't try to eliminate risk as much as manage it, and intsead, can increase their chance of profitability by better reducing that uncertainty. This can be accomplished by making better trading decisions than those that are less informed, less knowledgeable, and less skilled. Ultimately, it is not what the trader knows, but who he is. The really profitable traders are able to ignore or subvert their natural tendencies to do what feels comfortable, and instead, do what is necessary, to be optimally profitable.

When you place a trade in a chicago or NY futures market, you are stepping into the ring with the heavyweights - this playing field is level.

Hmm, not sure I can really agree on this.

You are both driving on the same Interstate highway, but one of you is driving a Pinto, and the other a 18-wheeler weighing 40 tons. You might be on the same road with the same exits or red lights, but the playing field is hardly level.

@Private Banker......

I also scale in. For the longest time, I was afraid to do this because I misunderstood the message that is hammered home "do not add to losers". I started by only adding to trades when they had moved in my direction. But now I add to trades that both move in my direction, as well as move against me. However, there is an incredibly important distinction that you must make ---- has the trade moved against you, but is still valid? Or has the trade moved against you, and not your original trade idea is no longer a good one.

Clearly you shouldn't add in the second scenario when the trade is no longer a good trade. And that is where most people go wrong, they average down/dollar cost average to try to minimize pain. For me, I simply know ahead of time that I will likely add once, twice, maybe even three times in a trade, so I never put the full trade on in one spot.

But I also trade much bigger charts than I used to, and bigger charts than a lot of people on the forum these days. That is important because my stops are much bigger, as are my targets. Again, not talking about $$$. I am talking about distance in ticks, not dollars in ticks. I sometimes trade using my spot forex account and sometimes full sized futures, all depending on what the total trades I have working in the market are doing and how much my risk exposure is.

Mike

...But now I add to trades that both move in my direction, as well as move against me. However, there is an incredibly important distinction that you must make ---- has the trade moved against you, but is still valid? Or has the trade moved against you, and not your original trade idea is no longer a good one.
...
Mike