Position sizing: how to set your risk per trade

Most losses that hurt do not come from a bad setup. They come from a position that was too large for where the stop sat. The direction can be right and the trade can still ruin your week if the size was wrong. That is why size comes before direction.

1. Choose the risk amount before you choose the size

Decide what you are willing to lose if invalidation is hit — as a fixed amount or a fixed share of the account. Which number you pick is your call and depends on your finances. The point is that it is chosen in advance and does not change once the trade is open.

2. Let the stop decide the size

The arithmetic is short: size = risk amount ÷ distance from entry to invalidation. Worked example, not a recommendation: risk amount $100, entry $100, invalidation $95. The distance is $5 per unit, so the position is 20 units. Move the stop to $90 and the same risk gives 10 units. Wide stop, small position. Tight stop, larger position. The risk is the same.

3. Leverage does not change the risk

Leverage changes how much margin you tie up — not how much you lose if the stop is hit. If leverage makes you take a bigger position than the arithmetic says, you have increased the risk, not improved the setup. Do the arithmetic first and apply leverage afterwards, if at all.

4. Assume crypto will not be tidy

Wicks, slippage, and weekend moves can take you out worse than the stop. That is not a flaw in the plan, it is the market. Round the size down, not up, and accept that the planned loss is a minimum, not a maximum.

5. Scaling does not change the total

If you split the entry into parts, your risk is the sum of the parts. If you reduce at TP1, you have taken risk off the table — but the original risk was still the one you set before opening. Write it down so you can see whether you kept to it.

What this note is not

This is not a recommendation of a specific risk number and not a results recap. Cryptomanden does not publish win rates or live performance on the site. A signal is decision support: entry, invalidation, and targets. Size, leverage, and whether you trade at all are your responsibility.

Trading involves risk. Past results do not guarantee future results. This article is education and general market information only — not personal financial advice.