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THE SKILL NOBODY POSTS ABOUT

Position Sizing

Watch the full video alongside our detailed notes and extra learning resources in this full cheat sheet companion guide.

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01
Section 1 0:00

What Is Position Sizing?

What you'll learn: Why position sizing is the one skill that separates survivors from blown accounts - and why most traders confuse it with leverage.

Key Moments
Core Concepts
Critical Takeaways
  • Position size = how much you can lose, not how much you can buy.
  • It's set by your stop distance, not your conviction.
  • Risk-first, not reward-first. Decide what you're willing to lose before you click anything.
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02
Section 2 1:25

Why It Matters

What you'll learn: What sizing buys you (survival, calm, longevity) and what ignoring it costs you (early exits, revenge trades, blow-ups).

Key Moments
Critical Takeaways
  • Survival is the strategy. You need to last long enough for your edge to play out.
  • An oversized position screws with your decision-making. The trade controls you, not the other way around.
  • Cutting winners early and letting losers run is almost always a sizing problem in disguise.
03
Section 3 2:40

The Maths of Losing Streaks

What you'll learn: The compounding maths that turns 1% risk into a survivable streak and 10% risk into a wipeout - including the recovery percentages.

Key Moments
Critical Takeaways
  • 10 losses at 1% = 10% down. Recoverable.
  • 10 losses at 10% = 65% down. Almost unrecoverable.
  • A 40% drawdown needs a 67% gain to break even. The asymmetry only gets worse from there.
  • Pros sit at 1-2% per trade because the maths is brutal at 5% and above.
04
Section 4 5:28

The Formula

What you'll learn: The one-line formula that turns "I want to risk 1%" into "I'm buying X coins" - and the worked example on BTC.

Key Moments
Critical Takeaways
  • Position Size = Risk Amount ÷ Stop Distance. Two inputs, one number.
  • Risk Amount = Account × Risk %. So $100K × 1% = $1,000.
  • Stop placement is set by the chart, not by the position size you want.
  • You don't have to do the maths by hand. The terminal does it for you.
05
Section 5 9:13

Leverage Doesn't Change the Math

What you'll learn: The most common misconception on the internet: that leverage changes your risk. It doesn't. It changes your margin requirement.

Key Moments
Critical Takeaways
  • Leverage changes the margin you put up. It doesn't change your risk.
  • Risk = position size × stop distance. Leverage doesn't appear in the formula.
  • Stop 1% away on a 1% risk = 100% of account as position size. Stop 2% away = 50%. Stop 5% away = 20%. Stop 10% away = 10%.
06
Section 6 10:38

Three Worked Examples

What you'll learn: The same maths applied across a BTC range trade, a BTC swing trade, and a SOL breakout - showing how stop distance dictates size.

Key Moments
Critical Takeaways
  • Tight stop, bigger position. Wide stop, smaller position. Same dollar risk either way.
  • A range trade with a 1% stop sizes up. A swing trade with a 5% stop sizes down. That's the formula working.
  • An altcoin with a $15 stop on a $200 entry is a 7.5% stop. Position scales accordingly.
  • Position-without-stop isn't a trade. It's a gamble.
07
Section 7 15:59

Common Mistakes

What you'll learn: The five sizing mistakes that kill accounts - and the one that almost every revenge spiral starts with.

Key Moments
Critical Takeaways
  • Don't size on conviction. Conviction lies. Stop distance doesn't.
  • Don't move the stop to make the position you want fit the maths.
  • Volatile altcoins need wider stops, which means smaller positions. Same risk percentage, smaller size.
  • Sizing up after losses is how good traders blow up. Reduce size after a streak, don't add.
08
Section 8 18:19

Sizing on Funded Accounts

What you'll learn: Why the same formula applies to a prop account - and how the hard drawdown limit becomes a circuit breaker that forces discipline.

Key Moments
Critical Takeaways
  • Funded accounts have a hard floor. One oversized trade breaches it.
  • Rule of thumb: risk no more than 1/10th of the max drawdown per trade.
  • The eval fee is the hard ceiling on your loss. That's a feature, not a bug.
  • Sizing isn't harder on a funded account. It's cleaner - the numbers are pre-set.
Putting It All Together

Your Sizing Workflow

Run this on every trade. After 20 reps it takes ten seconds.

1

Pick the risk %

1% on a personal account. 0.5% on a funded account with a tight drawdown.

2

Calculate the risk amount

Account × risk %. That's the dollars at risk if the stop hits.

3

Find invalidation

Where on the chart is the trade idea wrong? That's the stop.

4

Measure stop distance

In dollars, from entry to stop.

5

Divide

Risk Amount ÷ Stop Distance = Position Size.

6

Pre-accept the loss

The position is sized. The worst case is known. Click with calm.

7

Practice on Breakout

Start a trading test at breakoutprop.com. Real markets, structured risk - the best way to learn.

Put it to work
Take what you learned here into a real evaluation. Pass, get funded, keep 80-90% of profits.
Purchase an Evaluation