Entries are what traders talk about. Risk rules are what decides whether any of it compounds — and unlike the market, they are entirely under your control.
Risk the same small percentage of the account on every trade, typically 0.5%–2%. Fixed risk means position size shrinks automatically as the account falls and grows as it rises, which is the mechanism that makes ruin arithmetically hard.
| Risk per trade | Equity after 10 consecutive losses |
|---|---|
| 1% | 90.4% |
| 2% | 81.7% |
| 5% | 59.9% |
| 10% | 34.9% |
Losses and gains are not symmetric. −10% needs +11.1%. −25% needs +33%. −50% needs +100%. −80% needs +400%. Every risk rule below exists because of this table.
Set a daily loss limit — commonly three times your per-trade risk — and stop when it is hit. The purpose is not the arithmetic; it is to interrupt the tilt sequence, where a loss provokes a larger, less considered trade, which provokes a larger one again.
Five altcoin longs are one Bitcoin-beta position wearing five tickers. In a liquidation-driven flush, crypto correlations converge toward one and a portfolio that looked diversified draws down as a single bet. Size the theme, not each ticker.
Leverage does not improve an edge. It shortens the time available for the idea to work. At 20× a routine 5% session ends the position regardless of what happens next — check the liquidation distance against the asset's ordinary daily range before choosing a multiplier, every time.
Rules that live only in your head are renegotiated in drawdown. Write the risk percentage, daily limit, maximum concurrent positions and correlation cap, and review them against your journal every twenty trades. The point is not discipline as virtue — it is that undocumented rules cannot be tested, and untested rules cannot improve.
Most frameworks use 0.5%–2% of account equity. At 1%, ten consecutive losses leave roughly 90% of capital; at 10% they leave 35%.
It is half of it. The stop sets the distance; position size converts that distance into a fixed amount of risk. Neither works without the other.
Cap total open risk and treat correlated positions as one. In crypto, most altcoins behave as a single beta exposure during stress.
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