How to calculate position size — the only formula you need
Position sizing is the single most important risk decision you make on every trade. Get it right and a losing streak is survivable; get it wrong and one bad trade ends the account. Here's the simple, correct way to size any trade — crypto, forex or stocks.
The position size formula
You decide two things before entering: how much of your account you'll risk (a fixed %), and where your stop-loss goes. Everything else follows:
Position size (units) = Risk amount ÷ |Entry − Stop|
That's it. The distance from your entry to your stop is your "1R" — the amount you lose if the trade hits your stop. By fixing risk as a % of the account, every loss is the same controlled size, regardless of the asset's price.
Worked example (crypto)
- Account: $10,000 · Risk per trade: 1% → risk amount = $100
- Entry: $60,000 · Stop: $58,800 → stop distance = $1,200
- Position size = $100 ÷ $1,200 = 0.0833 BTC (≈ $5,000 notional)
If price hits your stop, you lose ~$100 — exactly 1% — no matter how volatile BTC is that day. The same maths works for ETH, EUR/USD or AAPL; only the numbers change.
What about leverage?
Leverage changes the margin you post, not your risk. Your risk is still |Entry − Stop| × size. A common mistake is sizing off leverage ("10× so I'll go big") instead of off your stop — that's how accounts blow up. Size off the stop; use leverage only to free up margin.
How big should the risk % be?
Most professionals risk 0.5%–2% per trade. Why so small? Drawdown maths is brutal: a 50% drawdown needs a 100% gain just to recover. At 2% risk, it takes ~34 losing trades in a row to halve your account; at 10% risk, just ~7. Smaller risk = more shots at finding your edge.
Position sizing is half the equation
Sizing controls the downside. To actually grow, you need a positive expectancy — an edge — and the discipline to log and review every trade. That's what the EdgeLedger tools are for:
Risk Toolkit — $12
Position sizer, trade planner, Kelly & expectancy, and drawdown-survival tables in one workbook.
Get the ToolkitPro Journal — $19
Log trades; auto win-rate, R-multiple, expectancy, equity curve and per-setup breakdowns.
Get ProFAQ
Do I include fees? For sizing, fees are small enough to ignore; track them in your journal for accurate P&L.
What if I have no stop? Then you can't size correctly — define a stop first. "No stop" is unbounded risk.
Fixed % or fixed $? Fixed % compounds with your account and shrinks risk in drawdowns automatically. Use %.
Educational content, not financial advice. Trading involves risk of loss.