Position sizing.
How much should you buy? Enter a few numbers and we size the trade so a loss only ever costs what you're comfortable losing — never your whole account. Brand new to this? The plain-English guide is right under the calculator.
New here? The whole idea, in plain English.
Most people lose money by betting too big on one trade. Position sizing is just working out how much to buy so that a bad trade is a scratch — not a disaster. Below is every word on this page explained from zero. No experience needed.
First, the 5 words you need
- Position size
- How much you are actually buying. Buy $2,000 of Bitcoin and your position is $2,000. Think of it as the price of a house you are buying — say $200,000.
- Stop-loss
- Your safety exit: a price you decide in advance where you will get out if the trade goes the wrong way. A "5% stop" means you are out if the price falls 5%.
- Risk
- The most you will lose if the price hits your stop. This is not what you put in — just the loss. The calculator above shows it as your Risk amount.
- Margin
- The cash you actually put down to open the trade. Think of it as the deposit on the house — $20,000, not the full $200,000.
- Leverage
- The exchange lending you the rest, so a small amount of your cash controls a bigger position. Think of it as a mortgage: your deposit + the bank's loan = the whole house. "8x" means your cash is stretched 8 times.
The one line to remember: your stop-loss and how much you are willing to lose decide your risk and your position. Leverage only decides how much cash gets tied up — never how much you can lose.
⚠ The catch every beginner must know: leverage cuts both ways. It frees up cash, but if you skip the stop-loss, high leverage can wipe out your margin fast — the higher the leverage, the smaller the adverse move it takes to liquidate you. The fix is simple: always use a stop-loss. This calculator assumes you do.
Common questions
What is position sizing in crypto trading?
Position sizing determines how much capital to allocate to a single trade based on your risk tolerance and stop-loss distance. It ensures you never lose more than a predetermined percentage of your account on any trade. Without proper position sizing, even a winning strategy can lead to ruin through a single outsized loss.
What is the 1% rule?
The 1% rule means you never risk more than 1% of your total account on a single trade. With a $10,000 account, your maximum loss per trade would be $100 regardless of position size or leverage. This rule ensures you can survive a string of 20+ consecutive losses without catastrophic drawdown.
How does leverage affect position sizing?
Leverage doesn't change the dollar amount you risk — it changes how much margin (collateral) you need. A $5,000 position at 10x leverage only requires $500 margin, but a 2% adverse move still costs $100. The key insight: leverage changes capital efficiency, not risk (when stop-losses are used correctly).
Should I always use the same risk percentage?
Most traders use 1-2% consistently. Some reduce risk to 0.5% during volatile markets or increase to 2% for high-conviction setups. The key is never exceeding your maximum limit. Some professionals also reduce risk after a drawdown (e.g., halving risk after a 10% account decline).
What's the difference between position size and margin?
Position size is the total value of your trade. Margin is the collateral you deposit. With 10x leverage, a $10,000 position requires $1,000 margin. Your risk isn't determined by margin alone — it's determined by your position size and stop-loss distance.
How do I position size for crypto vs stocks?
The same principles apply, but crypto's higher volatility means stop-losses tend to be wider (3-10% vs 1-3% for stocks). This means position sizes should be smaller relative to account size. A 5% stop-loss on crypto with 1% risk means your position should be 20% of your account — much smaller than typical stock allocations.
Can position sizing prevent blowing up my account?
Yes — proper position sizing is the single most important factor in long-term trading survival. If you never risk more than 1% per trade, you'd need 100 consecutive losses to lose your account. Even a 50% win rate with 1:2 risk-reward is profitable when position sizing is controlled.
What is the Kelly Criterion?
The Kelly Criterion is a mathematical formula that determines the optimal bet size based on your win rate and risk-reward ratio. Formula: Kelly % = W - (1-W)/R, where W is win rate and R is reward/risk ratio. Most traders use half-Kelly (50% of the calculated amount) to reduce volatility in returns.