The single biggest mistake retail traders make isn't picking the wrong coin — it's sizing positions too large. Proper position sizing is what separates traders who survive from those who blow up their accounts.
The 1% Rule
Risk no more than 1–2% of your account on any single trade. This means if your stop-loss is hit, you lose at most 1–2% of your total capital.
Risk Amount = Account Size × Risk %
Position Size = Risk Amount / Stop Loss %Example
- Account: $10,000
- Risk per trade: 1%
- Stop-loss distance: 3%
Risk Amount = $10,000 × 0.01 = $100
Position Size = $100 / 0.03 = $3,333You open a $3,333 position. If it drops 3% (hitting your stop), you lose exactly $100 — 1% of your account.
Why This Matters: The Math of Drawdowns
At 1% risk per trade, you can lose 50 trades in a row and still have 60% of your account. At 10% risk, 10 consecutive losses wipe 65% of your capital — and you'd need a 186% gain just to break even.
Adjusting for Leverage
Leverage amplifies exposure but doesn't change your dollar risk — as long as you place your stop-loss correctly. With 5× leverage, you need a proportionally smaller position size or tighter stop-loss to maintain the same risk level.