For a good risk management system in your trading career, you must know how to calculate the position size that best suits your trading Risk Management System. A good trader needs to design a trading system that best suits his lifestyle and make it look closer to the risks he is taking while entering his position size in trading.

According to research, a good percentage of successful traders focus twice as much on their risk in trading as they do on the profit they expect. This helps them curb emotional distress and protect their account for a longer period of time.

So in this post, I am going to show you how you can calculate your position size in trading crypto while observing your personal risk management rules.

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## What is the position size in crypto?

Position size is the fraction of your total account size that you are willing to use in a trade. Having set your risk limit in trading, you can calculate the maximum amount (position) of your total account size that you can use to enter a trade without having to exceed your account risk limit.

Unlike in Forex trading, where pips are used in calculating position size, position size can be calculated in crypto trading by knowing your account balance, risk limit, open price, and stop price.

## How to determine your crypto account size

Another important thing to look at before calculating the position size in crypto is your total account size. The total account size mean a lot more than what you think.

Account size literally refers to the total amount of crypto assets you have in your trading account (whether spot or future). That sounds so simple, right? In calculating your account size while trying to place a trade, you need to look at this definition in another sense.

For example, let’s say you believe in the future of Bitcoin and have a long-term position tucked away in a hardware wallet. It’s probably best not to count that as a part of your trading capital.

In essence, your account size is the total amount of your assets available for entering a position in a particular trade.

## How to Determine Your Account Risk in Crypto Trading.

Determining the percentage of your account size at risk is an important step in order to know your position size in trading crypto. As I mentioned earlier, any successful trader must have some sort of trading system that will help him manage risk.

Most traders keep their account risk at 1% for each trade they take, and that is what I suggest for any person trading in the financial market.

Keeping your percentage loss as low as 1% will help you reduce emotional distress in times of loss while also allowing you to stay on your trading journey for a longer period of time.

There is one thing I notice. Once you lose a large amount of money in a particular trade, your emotions will lead you to engage in “revenge trading.” I call it “revenge” in the sense that you will rush back to the market and start entering unresearched positions in order to recover your losses, and this will cause you to lose more.

## How to calculate position size in trading Crypto?

Having known your account size and your account percentage risk (1% in this case), you can calculate your position size in trading crypto by setting your open price and stop loss price.

So here is a step-by-step tutorial on how you can calculate position size in crypto trading.

Here we will consider a scenario of buying any asset at $50 and setting a stop loss at $48 with a $1000 account.

### Step 1: Set your stop loss.

Here you basically specify the maximum amount you are willing to lose per unit on the coin you want to trade.

Let’s say you want to go long on an asset trading at $50. You can set your stop loss at $48.

### Step 2: Determine the loss per unit share.

To calculate position size in trading crypto, you need to know the difference between the entry price and the stop loss level, which is the loss per unit share.

In this scenario, as our entry price is $50 and our stop loss price is $48, the difference will be $2.

### Step 3: Multiply your account size with your percentage risk limit (1% in this case).

As we have a $1000 account size in this scenario and a percentage risk limit of 1%. Multiplying it will give us $100. That means we are willing to lose $100 on this trade.

### Step 4: Divide the risk limit by the value of your risk per unit share.

Remember, we calculated our risk per unit share at $2 in **step 2** above and our risk limit at $100. To get our position size, we simply divide the $100 by 2 and get 50.

And that is how to calculate position size in trading crypto. Also, you can use the Position Size and Risk Calculator to calculate your position size.

If you have any questions, you can drop them in the comment section below.