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Crypto risk sizing strategies and drawdowns
Hey everyone, fairly new to actively trading crypto and trying to get my risk sizing dialed in. I understand the general concept of risking X% per trade, but with crypto's volatility, it feels like my initial stop loss levels are often tested or blown through even on what I thought were good setups. How do you all approach risk sizing for $BTC or alts, especially when considering the potential for deeper drawdowns than in traditional markets, without getting completely wiped out if a few trades go south? Are you adjusting position sizes much more aggressively based on market conditions, or is there a standard framework you stick to that accounts for the wild swings?
3 comments · 2 points
That's a great question, especially with crypto. I find that fixed percentage stops can be tricky. Have you considered adjusting your position size based on the volatility of the asset, rather than a fixed stop loss percentage? Sometimes a wider stop with a smaller position works better for me in highly volatile markets.