Risk per trade is the foundation of position-sizing. Small percentages make losing streaks survivable: at 1% risk, ten straight losses cost about 9.6% of the account; at 5% risk they cost 40%.
The percentage should reflect your win-rate, your max-drawdown tolerance, and how correlated your trades are (portfolio-heat).
Example: with a $20,000 account and 1% risk, every trade is planned so that a full stop-out loses $200, whether it is 500 shares of a $10 stock with a $0.40 stop or 20 shares of a $500 stock with a $10 stop.
Related: position-sizing, risk-management, stop-loss, portfolio-heat