Position sizing: how to calculate how much to buy

Position sizing: what is it and why does it matter more than the entry?

Position sizing, in other words the size of your position, is the answer to the question «how much do I buy?». It sounds like a technical detail, yet it decides almost everything. Two people who enter at the same price, with the same stop, can end up with very different losses just because one bought ten units and the other a hundred.

Here is the point: you cannot control where the price goes, you can control how much you lose if you are wrong. Position size is the only lever you truly hold before you press the button. That is why anyone who studies the risk management always gets there: first you decide the risk, then you calculate the quantity.

How do you calculate the size of a position?

The formula is a single division. You start from three numbers that you decide before you enter.

1. Your capital. What you have in your account and are willing to put at stake.
2. The risk per trade. The part of your capital you accept to lose if the stop is hit, as a percentage. Many textbooks talk about 1%, but that is a convention, not a rule: what matters is that it is small and that you decide it beforehand.
3. The stop distance. The difference between the entry price and the price of the stop loss.

The money at risk is capital times percentage. The size, in units, is the money at risk divided by the stop distance. An illustrative example, with made up numbers: you have 5,000 euros and accept losing 1%, that is 50 euros. You want to enter at 100 with the stop at 95, so the distance is 5. Divide 50 by 5 and you get 10 units, worth 1,000 euros. If the stop is hit you lose 50 euros, exactly what you had decided, no more and no less.

If you do not want to do the math by hand, the position size calculator does the division for you: enter capital, risk and stop, and it tells you how many units.

Why does a wider stop mean a smaller position?

Because the money at risk stays fixed and the distance grows. Take the same example, with 50 euros at risk, and change only the stop. The numbers are illustrative.

The loss is always the same, what changes is the size of the position. It is the opposite of what beginners do by instinct: with a very volatile coin they feel they should «go all in», when logic says to do the opposite. How much a coin moves in a day is measured by the ATR, and a stop that is too tight for its volatility gets hit by noise. If you want to understand how to choose the distance, the stop loss guide explains the most common methods.

What is the difference between position size and leverage?

They are two different things, and confusing them is one of the costliest mistakes. Size tells you what the position is worth. The leverage only tells you how much margin you need to open it. If the position is worth 1,000 euros and you use 5x leverage, the required margin is 200 euros, but the loss at the stop stays the one calculated on the whole position: 50 euros.

So leverage does not change the risk if the size is calculated from the stop. It changes it when you use it to «fill» the available margin, opening positions larger than the calculation allows. Then the stop gets close to liquidation and a sudden move can close everything before you have time to decide. The leverage calculator shows how far away liquidation is for each leverage level.

What should you allow for besides the stop?

The basic calculation is clean, reality a little less so. Three things muddy it, and it pays to allow a small extra margin for them.

• Slippage. Sometimes a stop is executed at a worse price than the one you set, especially in fast moves. The real loss can slightly exceed the calculated one.
• Fees and spread. They are paid on entry and on exit and add to the loss. On large positions they weigh more.
• The funding rate. On perpetual contracts you pay or receive it at regular intervals. On long trades it is a cost to consider, as the guide to funding rate.

That is why someone who calculates prudently picks a risk percentage a little lower than the one they «could» afford. It is not pessimism, it is leaving yourself a cushion for what the calculation does not see.

How much should you really risk per trade?

There is no right number for everyone, there is a way to choose it. A good test is to ask yourself how many losses in a row you can take without changing method out of anger. With 1% risk, ten consecutive losses cost about 10% of your capital, a hard blow but a manageable one. With 10% risk the same ten losses almost wipe it out. Losing streaks happen even to people with a sound method, we talk about it in the guide to drawdown.

If you have little capital, the risk in euros per trade will be tiny and it will feel natural to raise it to «feel» the result. It is a common trap, the piece on how much money you need to trade online. Better to try the calculation on a demo account, where getting it wrong costs nothing and you can see how the curve changes when you change only the risk percentage.

The big picture, from the beginning, is in the guide to mindful online trading.

Where STA fits in

Every STA card has its own stop, decided before entering, and that is where the thinking about how much to risk starts: it is the same principle you find on this page. Ten artificial intelligence agents analyze the markets twice a day, with a debate between a Bull and a Bear, across 175 OKX Europe markets, including 44 US stocks and ETFs, and the funds stay in your OKX account.

The DEMO is free forever, with real prices and the same cards as REAL. You need an account. During the launch phase, which began on 16 October 2026, STA's fees are temporarily disabled, even in REAL; the ordinary price list, suspended while the launch lasts, is 18% of the positive net result of each day, with no offsetting of losses. The history of the cards, losses included, is public on GitHub.

Frequently asked questions

This article is for information only and is not investment advice. Trading crypto-assets involves a high risk, including the total loss of the capital used. Numerical examples are for illustration.