Volatility & sizing
Wild moves, smaller size
Crypto often moves 3 to 10% in a day, altcoins even more. A stop loss is the price where you exit a losing trade. Jumpy coins need stops further away, so the position must be smaller to keep the same amount of money at risk.
The sizing formula
Position size = money you're willing to lose ÷ how far away your stop is. Risking $100 with a stop 5% away means a $2,000 position: if the stop is hit, you lose 5% of $2,000 = $100.
Remember: Wider stop, smaller position.
Test yourself
A coin is twice as volatile as BTC. With the same dollar risk, your position should be…
SmallerWider stop, smaller size.
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