What percentage should I risk per trade?

Most professional traders risk 0.5-2% per trade. Beginners should start at 0.5-1%. The key is consistency — use the same risk percentage for every trade.

Does position size change with leverage?

No. Position size (and thus risk) is independent of leverage. Leverage only affects how much margin you need. You can have the same risk at 5x or 50x leverage.

How do I account for fees in position sizing?

Subtract expected fees from your risk budget. If your risk is $100 and fees are $20 (opening + closing), your effective stop-loss risk is $80.

Should I use the same position size for every trade?

You should use the same RISK PERCENTAGE, not the same dollar amount. Since stop-loss distances vary, position sizes will vary too.

Position Sizing for Leveraged Trades: Complete Guide

Position sizing is the single most important risk management skill for margin traders. It determines how much of your capital you allocate to each trade, directly controlling your risk exposure and potential returns. Getting position sizing wrong is the #1 reason margin traders blow up their accounts.

Why Position Sizing Matters More Than Entry Points

Most beginner traders obsess over finding the perfect entry point. In reality, position sizing has a much larger impact on long-term profitability:

A great entry with terrible position sizing = blown account
A mediocre entry with proper position sizing = survivable, learnable
Consistent position sizing = consistent risk = sustainable trading career

The Core Position Sizing Formula

Position Size = (Account Balance × Risk Per Trade) / (Entry Price - Stop Loss Price)

This formula ensures that if your stop-loss is hit, you lose only your predetermined risk amount.

Example:

Account balance: $10,000
Risk per trade: 1% = $100
Entry price: $50,000 (BTC)
Stop-loss: $49,000 (2% below entry)
Position size = $100 / ($50,000 - $49,000) = 0.1 BTC = $5,000
Required leverage: $5,000 / $100 margin? No — your margin depends on leverage selected
At 5x leverage: Margin = $5,000 / 5 = $1,000

The Risk Percentage Rule

The 1% Rule (Conservative)

Never risk more than 1% of your account on a single trade. This is the most widely recommended approach:

$10,000 account → max $100 risk per trade
After 10 consecutive losses: $9,000 remaining (90%)
Still very much in the game

The 2% Rule (Moderate)

More aggressive but still sustainable:

$10,000 account → max $200 risk per trade
After 10 consecutive losses: $8,000 remaining (80%)
Acceptable for experienced traders

The 0.5% Rule (Ultra-Conservative)

For beginners or very volatile markets:

$10,000 account → max $50 risk per trade
Extremely hard to blow up your account
Recommended for first 3-6 months of margin trading

Position Sizing and Leverage

A critical insight: position size and leverage are independent decisions.

Position size determines your RISK (how much you can lose)
Leverage determines your CAPITAL EFFICIENCY (how much margin you use)

Same Risk, Different Leverage:

Scenario	Position	Leverage	Margin Used	Stop Loss	Risk
A	$5,000	5x	$1,000	2%	$100
B	$5,000	10x	$500	2%	$100
C	$5,000	25x	$200	2%	$100

All three scenarios risk exactly $100. Higher leverage just means less margin tied up — but the risk (determined by position size and stop-loss distance) is identical.

The Kelly Criterion (Advanced)

The Kelly Criterion calculates the optimal bet size based on your win rate and average win/loss ratio:

Kelly % = W - [(1 - W) / R]

Where:

W = Win rate (e.g., 0.55 for 55%)
R = Average win / Average loss ratio (e.g., 1.5)

Example: Kelly % = 0.55 - [(1 - 0.55) / 1.5] = 0.55 - 0.30 = 0.25 (25%)

Important: Most traders use "Half Kelly" (12.5% in this example) or "Quarter Kelly" (6.25%) to reduce volatility. Full Kelly is extremely aggressive.

Position Sizing by Market Conditions

Use standard or slightly larger positions
Trends provide better risk-reward ratios
Stop-losses can be placed at clear technical levels

Ranging/Choppy Markets

Reduce position sizes by 25-50%
More false breakouts and whipsaws
Tighter stop-losses lead to more frequent small losses

High Volatility (News Events)

Reduce position sizes by 50-75%
Gaps and slippage are more likely
Consider sitting out major announcements

Common Position Sizing Mistakes

Mistake #1: Fixed Lot Size

Trading the same dollar amount regardless of stop-loss distance. This means wildly different risk per trade.

Mistake #2: "Gut Feel" Sizing

No calculation, just picking a "round number" that feels right. This is gambling, not trading.

Mistake #3: Scaling Up After Wins

Dramatically increasing position sizes after a winning streak, then giving it all back on the inevitable loss.

Mistake #4: Not Accounting for Fees

Fees on leveraged positions are calculated on the full position size. A 0.05% fee on a $100,000 position is $50 — significant if your risk budget is $100.

Mistake #5: Ignoring Correlation

Opening two positions on BTC and ETH with full position sizes is essentially doubling your risk, since they're highly correlated.

Position Sizing Calculator

Use our free Position Size Calculator tool to quickly calculate the right position size for any trade:

Inputs needed:

Account balance

Risk percentage per trade

Entry price

Stop-loss price

Our calculator outputs:

Position size (in units and USD)
Maximum leverage needed
Margin required at various leverage levels

Try it: [Position Size Calculator](/tools/position-size-calculator)

*Disclaimer: Position sizing reduces risk but doesn't eliminate it. Markets can gap past stop-losses. This is educational content, not financial advice.*