Calculate the optimal position size based on your risk tolerance. The #1 rule in trading: never risk more than you can afford to lose.
Never risk more than 1% of your account on a single trade. This ensures you can survive a losing streak without significant damage to your portfolio.
More aggressive traders may risk up to 2% per trade, but this increases the chance of significant drawdowns during losing streaks.
Always aim for at least 1:2 risk-reward ratio. This means your potential profit should be at least twice your potential loss.
// Position Size Formula
Position Size = Risk Amount / Stop Loss Distance
// Where:
Risk Amount = Account × Risk %
Stop Loss Distance = |Entry - Stop Loss|
Example: With a $10,000 account, 1% risk ($100), entry at $50,000, and stop loss at $49,000 ($1,000 distance), your position size would be: $100 / $1,000 = 0.1 BTC
| Risk Level | % Per Trade | Consecutive Losses to -50% | Best For |
|---|---|---|---|
| Conservative | 0.5% | 138 trades | Large accounts, beginners |
| Standard | 1% | 69 trades | Most traders |
| Moderate | 2% | 34 trades | Experienced traders |
| Aggressive | 3% | 23 trades | High conviction plays |
| Very Aggressive | 5%+ | 14 trades | Not recommended |
Most traders obsess over entries. Should I buy here? Is this the bottom? What they should obsess over: how much am I risking if I'm wrong? Position sizing is the difference between a bad trade that stings and a bad trade that blows up your account. Risk 1% per trade, you can survive 69 losing trades before losing half your capital. Risk 10%, and just 7 losses cuts you in half. Good entries with bad sizing leads to ruin. Mediocre entries with proper sizing? You'll survive long enough to improve. Here's the math every trader needs but most skip.
Two traders, same strategy, same win rate. Trader A risks 10% per trade. Trader B risks 1%. Five losses in a row (normal for any strategy), Trader A is down 41%. Trader B is down 5%. Trader A needs a 70% gain to recover. Trader B needs 5.3%. Here's the math that makes this critical: lose 50% and you need to gain 100% just to get back to even. That asymmetry destroys accounts. Proper sizing ensures no single trade or reasonable losing streak does permanent damage. With 1% risk and 1:2 reward ratio, you can be wrong 60% of the time and still make money. Risk 10% per trade? Even 70% winners can blow up your account when the 30% losers hit in a row. Size correctly or nothing else matters.
