Size the position from the risk, never the other way around. Enter what you're willing to lose if the stop hits, and this calculates the exact position that risks that amount — plus the leverage it quietly implies.
Risk amount = account × risk %. Stop distance = |entry − stop| ÷ entry. Position notional = risk amount ÷ stop distance. The quantity is notional ÷ entry price, and the effective leverage is notional ÷ account — shown because a tight stop on a large account percentage silently demands leverage most people never meant to take.
Example: $1,000 account, 1% risk, entry $60,000, stop $58,800. You're risking $10 over a 2% stop distance, so the position is $500 notional at 0.5× — smaller than most people guess, which is exactly the point.
The common professional range is 0.25%–2% per trade. In a 1,000-path simulation on real out-of-sample trades we ran, growth-optimal sizing was far more modest than intuition suggests — and max-leverage sizing produced eventual account loss in every path. Lower risk per trade also means a losing streak stays survivable: ten straight 1% losses is a 9.6% drawdown; ten straight 10% losses is a 65% drawdown.
Because leverage is an output of your entry, stop, and risk — not a setting to max out. If the implied leverage exceeds what your exchange allows, the honest fix is a wider stop or a smaller risk amount, not a closer liquidation price.
No. Sizing controls how fast you compound or how slowly you bleed — it cannot flip the sign of your edge. If the strategy loses money per trade on average, smaller size just loses it more slowly. Test the edge itself before optimizing the size.
Sizing is solved in one minute. Whether the strategy behind it has an edge at all is the question worth an honest answer.
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