Guides
Sourced Trader Guides
Position sizing from account risk and stop distance
One formula, two worked examples, and how fees and leverage change the result.
The formula
Position size(account × risk %) ÷ |entry − stop|
This fixes the loss if the stop is hit, however far away the stop is. A wider stop gives a smaller position. A tighter stop gives a larger one.
Crypto example
BTC, long
- Account
- US$1,000
- Risk per trade
- 1% = US$10
- Entry / stop
- US$60,000 / US$59,400
- Stop distance
- US$600
- Size
- 0.0167 BTC
10 ÷ 600 = 0.0167, about US$1,000 notional. The risk % is an example input, not a suggestion.
Stock example
Shares, long
- Account
- US$20,000
- Risk per trade
- 0.5% = US$100
- Entry / stop
- US$50 / US$48
- Size
- 50 shares
100 ÷ 2 = 50. Example inputs only.
Fees, slippage and leverage
- Add round-trip fees to the loss at the stop, or the real loss will exceed the plan.
- In fast markets, stops can fill worse than the set price.
- Leverage changes the margin needed, not the loss at the stop. On perps, check the liquidation price sits beyond the stop.
Tools
Sourced Trader
Trader tools built on primary sources. No hype, no signals, no performance claims.
Educational only. Examples use made-up numbers and aren’t recommendations. Questions? Email [email protected].