On this page
Inputs explained
1. Account balance
The “Account balance” field refers to your trading portfolio or account size. If you have an account size of $1000, then your balance input is $1000. (This does not include your leverage. It really only refers to what you actually own in your trading account!)
2. Risk per trade
“Risk per trade” (or risk percentage) refers to how much % of your trading portfolio you are willing to lose in case your stop loss gets hit. If your maximum risk level is 1, then you only lose 1% of your portfolio when your stop loss gets hit.
Example: Your trading portfolio is $5000, and your risk percentage is 2, then you only lose $100 in case of losing the trade, as 2% of $5000 is $100.
Most professional traders are only allowing a maximum risk of 1% of their trading account. That means they are only willing to risk 1% of their capital if their trade hits the stop-loss price. This ensures a slow but, most importantly, steady trading account equity curve. They are very careful and always take care of proper position sizing.
3. Entry price and stop-loss price
The entry price is where you plan to open the trade, and the stop-loss price is where you accept that the trade is wrong and want to be out. The calculator measures the gap between the two for you and reports it as the stop distance. Example: if you enter at $42,000 and put your stop at $40,950, the price only has to move 2.5% against you before your stop is triggered.
4. Leverage
The leverage refers to the multiplier you choose on your crypto futures trading platform. If your leverage is set to 1, you don’t borrow any money from the exchange. If your leverage is 5, your own capital is multiplied by 5 as you borrow money from the exchange. Leverage is a powerful yet risky tool as it can multiply your gains by a lot while also multiplying your losses by a lot. In the case of a liquidation, you lose the whole margin that you used for the trade. We created this tool to save you from this worst-case scenario.
Calculated fields (automatically calculated)
Amount at risk
Amount at risk refers to how much money you lose in the trade based on your inputs.
Position value (with leverage)
This refers to your actual position size, which is put into the market. This includes your margin multiplied by the leverage you choose. If you use $100 of your own money with a leverage of 5x, your position value is $500. You use $400 of the exchange and $100 of your own capital as margin.
Your position size should never be 100% of your capital.
Margin required
The required margin is how much of your own money you use for the trade. If you use $20 of your own capital with 10x leverage, your margin is $20 because that is the capital you need in order to open a position value of $200.
Why risk management is so important
Risk management is crucial when it comes to cryptocurrency trading. That’s why we created this free crypto position size calculator. Easily calculate your trade size and see exactly how much money you have to use and how much money you can potentially lose in a single trade.
You should always know how much you risk per trade. Always ask yourself this question: How much will I lose when my stop loss price gets hit? If you don’t know how much you risk per trade, you have no chance to beat the market in the long run. You must set a clear number for what you are willing to risk when your stop loss is triggered.
Trading careers can be very stressful. Especially in the crypto market, losing trades can quickly turn too large as it is a very volatile asset class. A risk calculator such as our position size calculator will help you with managing your risk and accurately calculate your trading size.
It does not matter which asset class you are trading and if you are open a long position or a short position. Risk management is crucial in every direction and under every market condition. The last thing you want to experience is your total account balance going to zero.
Do I need risk management?
Everybody needs risk management in trading. It does not matter if you have a big or small account size. The goal is to have a slow and steady account equity curve with minimal drawdown.
Conclusion
As trading involves substantial risks, you can utilize many great calculators and tools to help you out, such as a position size calculator, risk-to-reward calculator, or profit calculator. Our position sizing calculator helps you determine how big your position sizes can be based on your account balance and stop loss price.
We always give our best to provide you with useful tools and information. We work hard on the user-friendly interface. You can use our position size formula to manage your position size for every trade.
Hopefully, you will find this tool and article helpful. Trading fees are another important factor to consider when it comes to trading profitably, and you can compare them across every venue we track in our crypto exchange reviews.