How to calculate position size with leverage

The most common sizing mistake in crypto is starting from leverage: "I'll take 10x" — and only then wondering what happens if the trade goes wrong. The right order is the reverse. You decide how much you are willing to lose, you put the stop where the idea is proven wrong, and the position size follows from those two numbers. Leverage comes last, and it changes less than people think.

Step 1. Risk in dollars

Decide what share of the deposit one trade may cost. Common practice is somewhere between 0.25% and 2%.

Risk = deposit × risk per trade

With a $10,000 deposit and 1% risk, one losing trade costs $100.

Step 2. Distance to the stop

The stop goes where your idea is wrong — below a level that should hold for a long, above one that should cap for a short. Measure the distance from entry to stop as a share of the entry price.

Stop distance = |entry − stop| ÷ entry

Entry at $60,000, stop at $57,000: the distance is $3,000, or 5%.

Step 3. Position size

Position = risk ÷ stop distance

$100 ÷ 5% = $2,000 of position — about 0.0333 BTC. If the price reaches the stop, the loss is 5% of $2,000: exactly the $100 you agreed to.

Where leverage comes in

Leverage does not change the position or the risk. It changes only how much of your own money the same position requires — the margin.

Margin = position ÷ leverage

The $2,000 position needs $2,000 at 1x, $400 at 5x and $200 at 10x. The loss at the stop is $100 in every case.

The catch is liquidation. Roughly, a position is liquidated when the price moves about 100% ÷ leverage against it, before fees and maintenance margin: about 10% at 10x, about 4% at 25x. If the stop is farther away than that, the exchange closes the position before the stop is reached, and you lose the whole margin. The stop must be closer than liquidation. In the example the stop is 5% away, so from about 20x up the leverage is too high.

Scaled entries

If you enter in parts — say half at $60,000 and half at $58,000 with the stop at $56,000 — each part has its own distance to the stop: 6.7% and 3.4%. The position is sized so that the sum of the losses across the parts equals your risk, and the average entry is weighted by the coins bought at each price.

Several take-profits and risk/reward

Take-profits split the exit the same way: each target closes its share of the position. The total profit if every target is hit, divided by the risk, gives the risk/reward. One target at $66,000 in the example (+10%) earns $200 on $100 of risk: R/R of 2.

Common mistakes

• Sizing by leverage. "10x on a third of the deposit" says nothing about how much you lose at the stop.
• A stop beyond liquidation. Then the stop is decoration.
• Moving the stop to keep the size. If the stop has to be farther away, the position has to be smaller — not the other way round.
• Risking too much per trade. Five losses in a row at 5% each take almost a quarter of the deposit.

Let the calculator do it

The AxiPivot risk calculator does all of the above at once: deposit and risk per trade, up to three entries, a stop, up to five take-profits and leverage from 1x to 100x. It returns the position, the average entry, the margin for each entry and the risk/reward, and it warns you when the stop sits beyond liquidation. It is free and works without an account.

For analysis, not for trading. Nothing here is financial advice.