Last Updated: 2026-10-26
A position-size calculation answers a conditional question: how much would this position lose if it exited at the assumed price? It does not cap the loss when the market gaps, an order fails, collateral changes or a venue becomes unavailable. Use the worksheet below to separate the planned trade from those failure cases.
This is educational arithmetic, not a recommended allocation or evidence of a profitable strategy. All prices and account balances below are hypothetical. Crypto positions can lose their entire value; leveraged obligations depend on the contract and account terms.
Work in dollars, units and account equity separately
Suppose account equity is $10,000 and the chosen illustrative loss budget is $100. A BTC entry at $95,000 with an assumed exit at $93,000 has a $2,000 difference per BTC.
$100 ÷ $2,000/BTC = 0.05 BTC
That is a $4,750 position, with $100 of price loss at the assumed exit, before costs. Those three numbers describe different things. The $100 is neither the amount invested nor a guaranteed maximum loss. The example does not recommend risking 1% of an account.
Now reserve an assumed $10 for fees and execution costs inside the same $100 budget:
($100 − $10) ÷ $2,000/BTC = 0.045 BTC
If the actual exit is $91,000, this smaller position loses $180 on price alone. With the assumed $10 costs, the loss is $190. A useful plan therefore records both the intended exit and an adverse-fill scenario. If costs depend on position size, calculate them from that size rather than treating a fixed allowance as exact.
A stop is an instruction with execution conditions
A stop-market order prioritizes getting an order to market after its trigger; its fill can differ from the trigger price. A stop-limit controls its acceptable price but can remain unfilled. A time-based review or a thesis invalidation is a decision rule, not an exchange guarantee.
The SEC investor bulletin on stop orders explains this price-versus-execution distinction for securities. For a crypto product, separately verify its actual trigger reference, supported order type, partial-fill behavior and outage handling. Do not assume the securities description establishes a particular exchange's implementation.
Write down what happens if the intended exit is unavailable. Include who or what detects the failure, how open orders and positions are reconciled, and when new entries stop. A local alert cannot guarantee that a server-side order exists.
Leverage and overlapping positions
With $1,000 of equity supporting $10,000 of linear exposure, a 5% price move corresponds to $500 of price P&L before fees and funding. This is exposure arithmetic, not a liquidation-price formula. Maintenance margin, mark price, collateral valuation and product rules affect liquidation.
Three separate $1,000 allocations, each carrying $10,000 of exposure, have $30,000 notional against $3,000 combined equity: 10×, not 30×. If all are long the same asset, they remain one concentrated directional bet even though three strategies created them. Check gross exposure, net exposure and shared collateral separately; netting can hide basis or venue risk.
Do not assume an isolated-margin label guarantees every possible loss is limited to a displayed amount. Read the product's collateral, automatic top-up, liquidation and liability terms. Funding schedules and rates are product-specific; put the relevant payments inside the holding-period scenario.
Drawdown is measured from a stated starting point
Ten successive losses of 1% of the remaining balance leave about 90.44% of the initial balance, a 9.56% drawdown. Ten 10% losses leave about 34.87%, a 65.13% drawdown. Recovering from the latter requires about 186.80% growth on the reduced balance. These examples assume the stated losses actually occur, with no additional costs or cash flows.
Loss control can reduce exposure. It cannot make a negative-expectancy strategy profitable. A strategy that wins often can still lose money when its losses and costs outweigh its gains.
A record you can review
Scroll sideways to see every column. Keyboard: focus the table region and use the arrow keys.
| Record | What belongs there |
|---|---|
| Account basis | Equity timestamp, currency, cash flows and collateral already committed |
| Trade hypothesis | Observable condition, invalidation and review horizon |
| Planned loss | Quantity, entry, assumed exit and estimated costs |
| Failure scenario | Adverse fill, missed exit, unavailable venue or collateral change |
| Combined exposure | Other positions sharing direction, collateral or custody |
| Review rule | User-chosen pause condition and evidence required before resuming |
| Actual outcome | Fills, costs, open exposure and the difference from the plan |
Keep long-term holdings and short-term trade rules explicit rather than forcing the same exit rule onto both. Multiple custodians can reduce one concentration while introducing additional operational and recovery risks. Neither more accounts nor more coin names proves diversification.
For short-horizon cost arithmetic, see the scalping research worksheet. There are no exchange endorsements or verified trading results in this article. The site may earn commissions on affiliate links elsewhere; those arrangements do not establish that a product is suitable for you.