Crypto Position Sizing Calculator

Crypto position sizing Calculator: Risk-Based Approaches That Work

position sizing is the difference between a bad trade costing you 1% and costing you 30%. Most traders focus on entry signals while ignoring the math that actually determines their survival.

This guide provides calculators and formulas for sizing positions properly.

The position sizing Framework

Every position size calculation needs three inputs:

1. Account risk - How much of your account to risk per trade
2. Trade risk - Distance from entry to stop loss
3. Current conditions - Volatility, correlation, confidence

Formula:

Position Size = (Account × Risk Per Trade) / (Entry Price - Stop Loss)

Method 1: Fixed Fractional

The simplest approach. Risk a fixed percentage per trade.

Calculation

Risk Amount = Account Balance × Risk Percentage
Position Size = Risk Amount / Stop Distance (in dollars)

Example

• Account: $10,000
• Risk per trade: 1%
• Entry: $40,000 (BTC)
• Stop loss: $38,000
• Stop distance: $2,000

Risk Amount = $10,000 × 0.01 = $100
Position Size = $100 / $2,000 = 0.05 BTC
Position Value = 0.05 × $40,000 = $2,000 (20% of account)

Pros and Cons

Pros: - Simple to calculate

• Consistent risk per trade
• Works in any market condition

Cons: - Doesn't account for win rate

• Ignores position correlation
• No adjustment for conviction

Recommended Risk Levels

Never risk more than 2% without exceptional circumstances.

Method 2: Kelly Criterion

Mathematically optimal sizing based on edge and win rate.

Formula

Kelly % = W - [(1-W) / R]

Where:
W = Win rate (decimal)
R = Win/Loss ratio (average win / average loss)

Example

• Win rate: 55%
• Average win: $300
• Average loss: $200
• R ratio: 1.5

Kelly % = 0.55 - [(1-0.55) / 1.5]
Kelly % = 0.55 - [0.45 / 1.5]
Kelly % = 0.55 - 0.30
Kelly % = 0.25 or 25%

Half Kelly

Full Kelly is too aggressive for most traders. Use half or quarter Kelly:

Practical Position = Kelly % × 0.5
25% Kelly = 12.5% practical position

The Problem With Kelly

Kelly assumes:

• You know your exact win rate
• You know your exact reward:risk
• Outcomes are independent
• You can withstand drawdowns

In crypto, these assumptions rarely hold. Use Kelly as a ceiling, not a target.

Method 3: Volatility-Adjusted (ATR-Based)

Size positions based on current market volatility.

Calculation

Position Size = (Account × Risk%) / (ATR × Multiplier × Entry Price)

Example

• Account: $10,000
• Risk: 1% ($100)
• BTC Entry: $40,000
• 14-day ATR: $1,500
• ATR Multiplier: 2 (stop at 2× ATR)

Stop Distance = $1,500 × 2 = $3,000
Position Size = $100 / $3,000 = 0.0333 BTC
Position Value = 0.0333 × $40,000 = $1,333

Dynamic Sizing

When volatility increases, positions automatically decrease:

This protects you during volatile periods.

Method 4: Heat-Based Sizing

Track total portfolio heat (open risk) and size accordingly.

Heat Calculation

Portfolio Heat = Sum of (Position Size × Distance to Stop)
Maximum Heat = Account × Max Heat Percentage
Available Heat = Maximum Heat - Current Heat

Example

Current positions:

• BTC Long: $2,000 position, 5% from stop = $100 at risk
• ETH Long: $1,500 position, 4% from stop = $60 at risk

Current Heat = $100 + $60 = $160
Max Heat (2%) = $10,000 × 0.02 = $200
Available Heat = $200 - $160 = $40

New position maximum risk: $40

This prevents overexposure even when individual positions are sized correctly.

position sizing Spreadsheet

Setup

Formulas

Risk Amount (G2): =A2*B2
Stop Distance: =ABS(C2-D2)
Position Size (E2): =G2/ABS(C2-D2)
Position Value (F2): =E2*C2

Google Sheets Template

A1: Account Balance    B1: 10000
A2: Risk %            B2: 0.01
A3: Entry Price       B3: 40000
A4: Stop Loss         B4: 38000
A5: Stop Distance     B5: =ABS(B3-B4)
A6: Risk Amount       B6: =B1*B2
A7: Position Size     B7: =B6/B5
A8: Position Value    B8: =B7*B3
A9: Account %         B9: =B8/B1

Correlation Adjustment

Correlated positions compound risk. Adjust sizing for correlation:

High Correlation (>0.7)

When BTC and ETH both long:

• Treat as partially single position
• Reduce combined size by 30-50%

Example

Standard sizing would give:

• BTC: 2% position
• ETH: 2% position
• Total: 4%

With 0.8 correlation:

Adjusted Total = 4% × (1 + 0.8) / 2 = 3.6% effective exposure
Reduce each by: 3.6% / 4% = 90%
Adjusted positions: 1.8% each

Confidence-Based Sizing

Scale position size based on setup quality:

Tier System

Criteria Example

A+ Setup requires: - Multiple timeframe confirmation

• Volume confirmation
• Key level interaction
• Clean chart structure
• Low correlation to existing positions

Common Sizing Mistakes

1. Sizing Based on Conviction, Not Math

"I'm really confident" isn't a position sizing input. Use the calculator regardless of feelings.

2. Ignoring Compounding Effects

A 50% loss requires 100% gain to recover. Proper sizing keeps losses recoverable.

3. Not Adjusting for Account Size

Smaller accounts can take slightly higher risk (more important to grow). Larger accounts should be more conservative (preservation matters).

4. Forgetting About Fees and Slippage

Include realistic costs in stop distance:

Effective Stop = Stop Distance + (Entry × Fee% × 2) + Expected Slippage

Quick Reference Calculator

For Fixed 1% Risk:

Position Size (BTC) = Account × 0.01 / Stop Distance (USD)

For ATR-Based (2 ATR Stop):

Position Size = (Account × 0.01) / (ATR × 2)

Maximum Position Check:

Max Position = Account × 0.20  // Never more than 20% in single position
If calculated position > Max Position, use Max Position

FAQs

What's the maximum I should risk per trade? 2% is the standard maximum. Going to 3% is aggressive and should be rare. Never exceed 5% per trade regardless of conviction.

Should I use the same position size for all trades? No. Adjust based on stop distance, volatility, and setup quality. The risk amount stays constant, but position size varies.

How do I size positions for scaling in? Allocate total position size across entries. If planning 3 entries, size each at 33% of calculated total.

Does position sizing work for leverage trades? Yes, but calculate based on notional exposure. A 10× leveraged position of $1,000 has $10,000 exposure and should be sized accordingly.