I used to decide how much to buy first, then figure out where to put my stop-loss. It took a few losses for me to realize I had it completely backwards.
Now I do things this way: first I work out how much I can afford to lose on a trade, then I calculate my position size. It might sound basic, but it’s the main reason I’ve managed to survive in this market.
Let’s use today’s actual price as an example 👇
Say I have 10,000 U in capital. My rule is that I can lose no more than 1% on any single trade—that’s 100 U.
$BTC It’s around 81,300 now. Over the past 30 days, it’s dipped as low as 80,029. So if I wanted to go long, I’d set my stop-loss just below 80,000, say at 79,800. That’s about 1.85% below the current price.
That makes the position size 100 ÷ 1.85% ≈ 5,400U. It’s not your entire balance, and it’s not an arbitrary “half position”—it’s calculated.
$SOL It’s around 102.7 now, with a 30-day low of 100.8. Set the stop-loss at 99.5, about 3.1% away. To keep the loss at 100U, you can only open a position of around 3,200U.
See the difference? SOL’s largest daily move over the past 30 days was close to 5.8%, while BTC’s was only 3.3%. The more volatile the coin, the farther away your stop-loss needs to be, so your position size must be smaller. Many people open positions in altcoins just as large as their BTC positions, which means they’re taking on twice the risk with the same amount of money.
A few lessons I learned the hard way:
- Set your stop-loss before stepping away from the computer. Don’t trust yourself to “keep an eye on it.”
- If your stop-loss gets hit, accept it. Don’t immediately open a revenge trade in the opposite direction.
- Leverage doesn’t change the math. It just lets you open the same-size position with less margin; the amount you lose won’t be any smaller.
Honestly, this method won’t make you rich overnight, but it can help you still have capital to keep playing after five losses in a row 😅
How much are you usually willing to lose on a single trade? Less than 1%, or more than 5%? Share in the comments and let’s see how different everyone’s styles are.
This is just my personal view. Manage your own position size. The above is for informational purposes only and does not constitute investment advice. Markets involve risk.