Size the position from the risk you choose.

What is crypto position sizing?

Position sizing answers a simple but important question: how large can a trade be if you already know how much you are willing to lose at the stop?

Instead of choosing size from leverage alone, risk-based sizing starts with account balance, risk percentage, entry price and stop-loss distance.

The risk-based position size formula

LEVRISK first converts your risk percentage into a monetary risk budget.

It then divides that budget by the absolute distance between entry and stop:

The resulting quantity tells you how many units fit inside the specified stop-loss risk, before considering slippage or exchange-specific execution effects.

Position size is not the same as margin

Notional position size is the total market exposure. Required margin is the capital needed to support that exposure at the chosen leverage.

This distinction matters because increasing leverage can reduce required margin without reducing the underlying notional exposure or the price risk between entry and stop.

Why the stop-loss distance changes position size

A wider stop means each unit can lose more before the stop is reached, so the position must generally be smaller to keep the same monetary risk. A tighter stop allows a larger quantity for the same theoretical risk budget.

This is why choosing position size first and adding a stop afterwards can produce very different risk from what the trader intended.

Use leverage after defining risk

LEVRISK separates risk sizing from leverage. The risk budget defines how much the planned stop represents, while leverage determines how much margin is required and how close estimated liquidation may sit.

That gives you a clearer picture of the trade than treating leverage itself as a risk percentage.

Frequently asked questions