Understanding Position Sizing in Crypto Trading

Alright, let's talk position sizing, because too many of you are blowing up accounts ignoring it. It's simple: how much of your capital are you putting on a single trade. This isn't about 'what feels right.' It's a calculated decision based on your risk tolerance per trade, your stop-loss, and your total capital.

Say you're willing to lose 1% of your $10,000 account per trade ($100). If you're looking at $ETHUSD around $1876 and your stop-loss is tight at $1850, that's a $26 risk per share. To figure out your position size, you take your maximum dollar risk ($100) and divide it by your risk per share ($26). That gives you roughly 3.8 shares. You can't buy fractions of shares on most platforms, so you'd buy 3 shares. If you were wrong and hit your stop, you'd lose $78, well within your 1% risk tolerance. It's not sexy, but it keeps you in the game.