Position Size
Optimal trade size based on capital, risk, and stop-loss distance.
Golden rule: never risk >1-2% capital per trade. Formula: Position = (Capital × Risk%) / (Entry − Stop Loss). $10k capital, 1% risk, BTC entry $90k, SL $87k (3.3% below): position = $3000. Max loss $100/trade.
In plain words
Pro traders' golden rule: never risk more than 1-2% of capital on a single trade. Position size depends on how far your stop-loss is. Close stop = you can take a bigger position. Far stop = smaller. Protects you from bankruptcy even after many losing trades in a row.
Example
Capital $5000, risk 2% = $100/trade. Long ETH @ $3000, SL @ $2900 (3.3% below). Position = $3000 = 1 ETH. Loss: -$100 = 2% capital. After 30 losses you still have 54% capital.
Also known as: position size, risk management