The Golden Rule: Never Risk More Than 1-2%

The most important concept in trading is **Risk Per Trade**. This is the percentage of your total account that you will lose if your stop loss is hit. For most professional traders, this number is between 1% and 2%.

If you have a $10,000 account and risk 1%, you are willing to lose $100 on a single trade. This allows you to survive a losing streak of 10, 20, or even 50 trades without blowing your account.

The Universal Formula

Position Size = (Account Balance × Risk %) / Stop Loss Distance

Example: ($10,000 × 0.01) / $500 SL distance = 0.2 BTC position size.

Step-by-Step Calculation Guide

Step 1: Determine Your Risk Amount

Take your current account balance and multiply it by your risk percentage. This gives you the maximum dollar amount you can lose on this trade.

Step 2: Find Your Stop Loss Distance

Find your entry price and your stop loss price. Subtract the stop loss from the entry (for longs) or vice versa (for shorts). This is your distance.

Step 3: Calculate the Units

Divide the risk amount (Step 1) by the distance (Step 2). This is the exact number of units (BTC, ETH, SOL) you should buy or sell.

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The Danger of "All-In"

In crypto, high leverage often leads traders to put their entire account into a single position. Even with a great strategy, a single flash crash can liquidate you if your position sizing is not controlled. Always use the math.

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