What the tool is for. Plan risk per trade, stop distance and position notional before opening a leveraged position. The stop distance drives everything here, so a stop parked inside ordinary noise turns the risk figure into an expected loss.
The stop distance is doing all the work.
Position sizing is the bridge between a market idea and a survivable trade. The tool turns a stop distance into capital at risk. Which means the output is only ever as honest as that one input, and that is where the arithmetic gets abused.
Notice the direction of the formula. You choose what you are willing to lose and where the idea is wrong, and the size falls out. Run it backwards — decide the size you want, then look for a stop that produces it — and the calculator will cheerfully hand you a tight stop sitting in the middle of ordinary noise. The position will then be closed by a routine wick rather than by anything to do with your thesis, and the loss will still be a full loss. If the level that actually invalidates the idea is far away, the correct response is a smaller position, not a nearer stop.
Two things the number does not include. Fees and slippage sit on top of it, so a risk budget of one percent is really that plus the cost of getting in and out, and on a tight stop those costs are a meaningful share of the total. And the calculator sizes one trade in isolation. In crypto, three separate one-percent positions in BTC, ETH and a large-cap alt are not three independent bets; on a bad day they move together and you were carrying a three-percent trade the whole time. Size the correlated group, not the individual line.
Keep the risk budget fixed and halve the stop distance. The notional the calculator returns doubles. Now ask whether you would have opened a position that size on purpose — because with a tight stop, a modest risk budget quietly implies leverage, and it is the notional, not the risk percentage, that determines whether a gap can take more from you than you planned to lose.
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The output assumes the stop fills where you put it
Every figure here rests on one assumption the calculator cannot check: that the exit happens at the stop price you typed. Through a gap or into a thin book it will not, and the loss runs past the budget by however far the fill lands beyond the level — which is also why a stop tucked just under an obvious level, where everyone else's is sitting, tends to fill worse than one given some room. Re-read the sanity-check line before you act. It restates the stop distance and the cash at risk in the same breath, and a distance that looks implausibly small is usually a typo rather than a good entry.
Cross-check the size against the rest of the book
Two checks belong outside this box. First, add up the risk you are already carrying across every open position that would move together on a bad day and compare that total with the budget you believe you are running, because the calculator sizes one trade as though the others do not exist. Second, hold the stop distance up against the ordinary noise of that particular asset — if a routine wick reaches it, the figure you are calling risk is what you will probably lose rather than what you might. Afterwards, compare the loss that actually settled with the one you planned: fees and slippage land on top of the number shown here, and on a tight stop they are a larger share of it than they look.
Risk note. Crypto assets are volatile and not suitable for every investor. This page is editorial analysis, not financial advice.