Your stop decides your position size. Not the other way round.
Say you have 1,000 USDT and risk 1% per trade. That's 10 USDT on every trade.
Two longs at writing prices:
- $ETH at 2,380.46, stop under 2,318 (the Oct 15 low). Distance 2.62%. Size: 10 ÷ 2.62% = 381 USDT.
- $BNB at 738.91, stop under 725.62 (Thursday's low). Distance 1.80%. Size: 10 ÷ 1.80% = 556 USDT.
Different sizes, same 10 USDT loss if the stop hits.
The usual mistake is the reverse: pick a round size first, say 500 USDT, then put the stop wherever the loss feels okay. On ETH that puts the stop at 2,332.8, inside the 2,318 to 2,360 zone ETH has tested four times since Oct 15. On BNB, 500 USDT with a 1.80% stop risks only 9 USDT.
Steps:
1. Find the level that proves you wrong
2. Measure the distance
3. Size = risk ÷ distance
When you open a trade, which do you set first: the stop or the size?
Say you have 1,000 USDT and risk 1% per trade. That's 10 USDT on every trade.
Two longs at writing prices:
- $ETH at 2,380.46, stop under 2,318 (the Oct 15 low). Distance 2.62%. Size: 10 ÷ 2.62% = 381 USDT.
- $BNB at 738.91, stop under 725.62 (Thursday's low). Distance 1.80%. Size: 10 ÷ 1.80% = 556 USDT.
Different sizes, same 10 USDT loss if the stop hits.
The usual mistake is the reverse: pick a round size first, say 500 USDT, then put the stop wherever the loss feels okay. On ETH that puts the stop at 2,332.8, inside the 2,318 to 2,360 zone ETH has tested four times since Oct 15. On BNB, 500 USDT with a 1.80% stop risks only 9 USDT.
Steps:
1. Find the level that proves you wrong
2. Measure the distance
3. Size = risk ÷ distance
When you open a trade, which do you set first: the stop or the size?