How to calculate position size in crypto, with leverage

An entry and a stop on a chart tell you where a trade is wrong. They do not tell you how much it costs. Position size does. The same setup can lose 0.5% of your account or 15% depending only on how much you bought.

Start from the loss you accept

Pick the share of your account you are willing to lose if the stop is hit. Many traders use between 0.5% and 2% per trade. The number matters less than keeping it fixed, because a fixed number makes every loss survivable and every result comparable.

A worked example

Account of 10,000 USD, risk 1%, so the risk amount is 100 USD. You plan a long on BTC at 60,000 with the stop at 58,800. The stop is 1,200 below the entry.

If the stop is hit, you lose about 100 USD, whatever the leverage. With 5x leverage the margin is 1,000 USD. With 10x it is 500 USD. The risk is the same in both cases. What changes is the margin you tie up and how near liquidation sits.

Add the fees

Fees are paid on both sides, and they are paid on the full position value. At 0.055% taker per side, the example above pays roughly 5 USD to enter and stop out. That is 5% of the amount you wanted to risk. Include fees in the calculation and the size drops slightly, here to about 0.079 BTC. On tight stops fees can take a large part of the risk, so check them before you trade, not after.

Where leverage fits

Leverage decides how much margin the exchange asks for, and it moves the liquidation price. It does not decide how much you risk. Choose the size from the stop, then choose a leverage low enough that liquidation is well beyond the stop. If liquidation comes before the stop, the stop is not protecting you.

Mistakes that cost accounts

• Sizing from margin. "I use 100 USD per trade" says nothing about risk. Size from the stop distance.
• Widening the stop without reducing size. A wider stop with the same size is a bigger risk.
• Using the same size for every trade. A 1% stop and a 6% stop need very different sizes for the same risk.
• Counting correlated positions as separate. Three long altcoin positions often move together. Treat them as one larger bet.
• Ignoring slippage. On fast moves a stop can fill beyond its price. Leave room for it, especially on thin markets.

Before every entry

1. Write the stop price before you think about size.
2. Calculate the size from your fixed risk percentage.
3. Check that liquidation is far beyond the stop.
4. Check what fees take from the risk.
5. Record all of it in your journal, so you can review whether you followed the plan.

Our lesson on position sizing walks through the same method on video: see the channel.