The 1% trading strategy is a risk management approach in which traders limit their exposure by risking only 1% of their total trading capital on any single trade. This strategy aims to protect traders from significant losses and helps to preserve their overall capital. By allocating a small percentage per trade, they can withstand multiple unsuccessful trades without depleting their funds. To implement this strategy, traders calculate the 1% of their trading capital and set their stop-loss level accordingly, ensuring that if the trade goes against them, the loss does not exceed 1% of their total capital.