Most traders decide "how much to enter" by feel: a tenth of the deposit, half, "all in". Professionals do the opposite: first they decide how much they are willing to lose if the trade fails — and only then compute the position size. Here is the formula, examples, and why it is the core of risk management.
Position size formula
Risk per trade is the share of the deposit you lose if the stop fires. Distance to stop is in percent of the entry price. Example: deposit $1,000, risk 1% ($10), stop 4% from entry → position $10 ÷ 0.04 = $250. If the stop fires, you lose exactly $10 (plus fees).
How size depends on the stop
Deposit $1,000, risk 1% per trade:
| Stop | Position size | Leverage needed |
|---|---|---|
| 1% | $1,000 | 1.0× |
| 2% | $500.0 | 0.5× |
| 4% | $250.0 | 0.2× |
| 6% | $166.7 | 0.2× |
| 10% | $100.0 | 0.1× |
The further the stop, the smaller the position, but the loss on a stop-out is the same. So a wide stop beyond the noise does not make the trade riskier — it only shrinks the position and greatly reduces random stop-outs (the data).
Live example: a stop beyond the normal move
With the stop at the TPR-72 80% bound (where price rarely goes within 3 days), positions look like this — deposit $1,000, risk 1%:
| Coin | Stop (80% bound) | Position size | Leverage up to |
|---|---|---|---|
| BTC | ±3.9% | $259.0 | 21× |
| ETH | ±5.6% | $177.8 | 14× |
| SOL | ±7.0% | $143.2 | 12× |
| ORCA | ±26.6% | $37.641 | 3× |
Numbers as of the data date. For any of 44 coins and your own deposit — use the calculator.
The key point: on a volatile coin the position is several times smaller at the same risk. The same position on Bitcoin and on a volatile altcoin is a completely different risk.
Why 1–2%, not 10%
Losing streaks happen even to a good strategy. Here is how much of the deposit is gone after N stops in a row:
| Stops in a row | Risk 1% | Risk 2% | Risk 5% |
|---|---|---|---|
| 3 | 3.0% | 5.9% | 14.3% |
| 5 | 4.9% | 9.6% | 22.6% |
| 10 | 9.6% | 18.3% | 40.1% |
| 20 | 18.2% | 33.2% | 64.2% |
At 1% risk even 20 losing trades in a row leave more than 80% of the deposit. At 5% — less than two thirds, and recovering from that requires earning more than half of what is left.
Common mistakes
- Size first, stop second. The stop is adjusted so the desired size "fits" — and ends up inside the noise.
- The same position on every coin — different risk.
- Risk counted per trade but not in total. Five same-side positions are one combined risk (why).
- Leverage chosen before the calculation. Leverage follows from position size, and liquidation must be beyond the stop (details).
Step by step
- Decide risk per trade: 0.5–2% of the deposit.
- Place the stop beyond the coin's normal move for the trade horizon.
- Compute size: deposit × risk ÷ distance to stop.
- Pick leverage so liquidation is beyond the stop.
- Check the total risk of all same-side positions.
Check your own trade
The TPR-72 calculator shows a stop beyond the noise, position size from your risk, safe leverage and the chance price reaches your level. Free, no sign-up.
Open the calculator →Telegram botFAQ
How do I calculate position size in trading?
Position size = deposit × risk per trade ÷ distance to stop. For example, a $1,000 deposit, 1% risk and a 4% stop give a $250 position: a stop-out costs $10.
What percent of my deposit should I risk per trade?
Usually 0.5–2%. At 1% even 20 stops in a row leave more than 80% of the deposit; at 5% — less than two thirds.
How are position size and leverage related?
Leverage is a consequence: it shows how many times the position exceeds the margin. What matters is that liquidation stays beyond the stop.
Why is position size smaller on altcoins?
Because their normal move is wider and a stop beyond the noise sits further away. At the same risk that gives a smaller position — which is correct.