The order that keeps position sizing sane
Start with the loss, then derive the size. ① Decide the share of your account you accept losing on one trade (say 1%). ② Choose the stop price. ③ Quantity = allowed loss ÷ (entry-to-stop distance + fees). Only then pick leverage — just high enough that the required margin fits inside your balance.
Liquidation estimate
A simplified isolated-margin, one-way formula: long = entry × (1 − 1/leverage + maintenance rate), short = entry × (1 + 1/leverage − maintenance rate). A 10x long is liquidated roughly 9.5% below entry. Exchanges apply tiered maintenance margin, funding and fees, so the real liquidation price can differ — verify with your exchange before ordering.
When the stop is beyond liquidation
You would be liquidated before the stop triggers, which makes the stop meaningless. The calculator flags this case; lower the leverage or tighten the stop.
Risk/reward and win rate
R is distance-to-target ÷ distance-to-stop. Break-even win rate is 1 ÷ (1 + R): at R = 2 you break even (before fees) near a 33% win rate. Expectancy = win% × R − (1 − win%); it should be positive to matter over time.
FAQ
How accurate is the liquidation price?
It is an estimate. Tiered maintenance margin, funding, fees and cross vs. isolated mode all change it. Compare with your exchange's calculator before trading.
Why size from the stop distance?
If you pick quantity first, the loss at the stop varies trade to trade. Fixing the allowed loss makes risk constant.
What leverage should I use?
There is no right answer. Leverage mostly reduces required margin; the rule of thumb is to keep the stop inside the liquidation price.
How much of my account should one trade risk?
Traders differ, but 0.5–2% is common. Pick a number you can survive a losing streak at.