Position sizing from your stop: the 1% rule with real numbers

The rule in one line

Pick the share of your account you accept to lose if the stop is hit. Many traders use 0.5% to 1%. Then divide that amount by the loss per coin between entry and stop.

Position size = (account × risk %) ÷ (entry − stop). The size changes from trade to trade; the money at risk does not.

A worked example with fees

Assumptions: a 10,000 USDT account, 1% risk per trade, a long BTC entry at 60,000 and a stop at 58,800, where the setup is invalid. The stop is 1,200 away, or 2% below entry.

Without fees, the size is 100 ÷ 1,200 = 0.0833 BTC, a position worth 5,000 USDT. A fee of 0.1% on entry and on exit adds 60 + 58.8 = 118.8 USDT of cost per coin, so the loss per coin at the stop is 1,318.8.

With fees, the size is 100 ÷ 1,318.8 = 0.0758 BTC, worth about 4,550 USDT. If the stop is hit, the loss is 100 USDT including fees, exactly the 1% you chose.

Why this keeps losing streaks survivable

Every strategy has runs of losses. Fixed-percentage risk shrinks each loss as the account shrinks, and the size of the risk decides how deep the hole gets.

• At 1% per trade, ten losses in a row leave the account down about 9.6%. You need about 10.6% to get back.
• At 2% per trade, the same streak costs about 18.3%. You need about 22.4% to recover.
• At 5% per trade, it costs about 40.1%, and you need about 67% just to break even.

Common mistakes

• Moving the stop further away after entry. The size was calculated for the original stop, so the risk quietly grows.
• Setting the stop where the loss feels comfortable instead of where the setup is invalid. The chart, not your wallet, decides the stop.
• Forgetting fees and slippage on small timeframes, where they can be a large part of the stop distance.
• Using leverage to make the position bigger than the formula allows. Leverage changes the margin you post, not the risk you should take.

Rounding and minimum order sizes

Exchanges set a minimum order size and a step size for each market. Always round the calculated size down, never up, so the real loss at the stop stays at or below the plan. With a step of 0.0001 BTC, 0.07582 becomes 0.0758.

On a small account, the minimum order can force a larger risk than you chose. If the smallest allowed position would risk more than your limit at this stop, skip the trade or pick a market with a smaller minimum. Widening the risk to fit the exchange is the same mistake as moving the stop.