Most account blow-ups come not from bad entries but from oversized positions. This calculator inverts the usual workflow: instead of guessing how many coins to buy, you declare how much you are willing to lose, and it tells you the exact position that respects that limit given your stop-loss.
How it works
The fixed-fractional method starts from your dollar risk — account balance times the risk percentage. The distance between entry and stop-loss is your risk per coin, so the quantity that loses exactly your dollar risk at the stop is dollar risk divided by risk per coin. Multiplying that quantity by the entry price gives the position value, and comparing it to your balance reveals the implied leverage; anything above one means the position is larger than your cash.
Optionally, the tool computes the Kelly Criterion from your historical win rate and your reward-to-risk ratio. Kelly is the account fraction that maximises long-run growth, and it also shows half-Kelly, the more conservative figure most professionals actually use. A zero or negative Kelly flags a trade with no positive expectancy.
Worked example
Account balance: $10,000. Risk per trade: 1% ($100). Entry price: $50,000 (for example, 1 BTC). Stop-loss: $48,000.
- Risk per coin: $50,000 − $48,000 = $2,000
- Coin quantity: $100 ÷ $2,000 = 0.05 BTC
- Position value: 0.05 × $50,000 = $2,500
- Implied leverage: $2,500 ÷ $10,000 = 0.25× (no leverage needed)
If the stop is hit, the account loses exactly $100 — 1% as intended. Now tighten the stop to $49,500 (risk per coin only $500) and the quantity rises to 0.2 BTC, position value $10,000 — the full account balance, at 1× leverage. Tighter stops with the same dollar risk demand larger positions.
Comparing fixed-fractional and Kelly sizing
These two methods answer different questions and work best together:
| Method | What it maximises | Inputs needed |
|---|---|---|
| Fixed-fractional | Survival — limits loss on any single trade | Account size, risk %, entry, stop |
| Kelly Criterion | Long-run compound growth | Win rate, reward-to-risk ratio |
Fixed-fractional is the foundational rule: it keeps you in the game by preventing any one trade from taking out too much of the account. Kelly is a growth-optimisation layer that tells you whether your edge is large enough to justify the risk you are taking.
A negative Kelly fraction is a powerful signal. It means the combination of win rate and reward-to-risk you entered implies a negative expected value. The mathematically correct bet size when your edge is negative is zero — skip the trade. Half-Kelly reduces Kelly’s recommended fraction by half, providing a significant cushion against the variance that theoretical Kelly assumes away.
Practical guidelines
- The 1% risk rule is a convention, not a law. Experienced traders often use 0.5–2% depending on volatility and conviction. The tool defaults to 1% but accepts any value.
- Stop placement drives size: a stop close to entry forces a large position to hit the dollar-risk target, which can generate high implied leverage on volatile assets. Widen the stop and reduce leverage, or reduce the risk percentage.
- Re-calculate before every trade rather than reusing a size. Account balance changes, market prices change, and the right position changes with them.
- This tool performs position sizing arithmetic. It does not predict whether a trade will win or what price will move where — those remain your decisions.