Why position size matters more than leverage
Your risk on a trade is not set by leverage. It is set by the distance to your stop-loss and the size of your position. Leverage only changes how much margin you need to open that position. Professional traders fix the risk first — commonly 0.5% to 2% of the account per trade — and let the position size follow.
Position size (coins) = Risk amount ÷ (|entry − stop| + fees per coin)
Margin = Position value ÷ leverage
Worked example
With a $10,000 account risking 1%, you can lose $100. You go long Bitcoin at $100,000 with a stop at $97,000 — a $3,000 or 3% move. The right position is about 0.033 BTC, worth roughly $3,300. With 5× leverage you only need about $660 of margin, but your loss at the stop is still about $100.
Liquidation price
On isolated margin, the exchange liquidates your position when losses consume your margin down to the maintenance level. A simplified estimate for a long is entry × (1 − 1/leverage + maintenance rate). If the liquidation price sits between your entry and your stop, the stop will never trigger — lower your leverage. Exact formulas vary by exchange and position tier.
Risk-reward ratio
Adding a take-profit shows your risk-to-reward ratio. At 1:2 you can be right only 34% of the time and still break even before fees. Higher ratios give you more room for losing streaks.
Frequently asked questions
What is the 1% rule in trading?
Never risk more than 1% of your account on a single trade. Ten losses in a row would cost about 10%, which is recoverable.
Does higher leverage increase risk?
Not if you size the position correctly and use a stop. Leverage reduces margin needed, but it moves your liquidation price closer to entry, which increases the chance of being liquidated by a wick.
How accurate is the liquidation price?
It is an estimate for isolated margin. Real liquidation depends on the exchange's maintenance margin tiers, fees and funding payments, so always check the exchange's own figure.
Should I include fees?
Yes. Entry and exit fees are taken on the full leveraged position value, so they matter more as leverage rises. The calculator includes them in the position size.