📐 Position Sizing: How Much Should You REALLY Buy?
Most beginners ask: "How much of this coin should I buy?"
Wrong question.
Right question: "How much am I willing to LOSE?"
Formula:
Position Size = (Portfolio × Risk %) ÷ (Entry - Stop)
Example:
Portfolio: $1,000
Risk: 2% ($20)
Entry: $70,000
Stop: $69,500 ($500 drop)
Position Size = $20 ÷ $500 = 0.04 BTC
0.04 BTC at $70,000 = $2,800
Yes — you can buy $2,800 worth but only risk $20!
Why? Because stop-loss is TIGHT.
📌 Key Takeaway:
- Wide stop = Buy less
- Tight stop = Buy more
- Risk % stays SAME
Are you sizing your positions based on risk or just "feeling it"?
#PositionSizing #RiskManagement #MoneyManagement #SmartTrading #BinanceSquare