Position Size and Leverage

Two numbers decide how much you can lose on a futures trade: the size of the position and the distance to the stop. Leverage does not change that risk – it only decides how much of your account is locked as margin.

Step 1: Your Risk per Trade

Decide how much of your account one trade may lose. Example: a $10,000 account and 2 % risk – one trade may lose $200.

Step 2: The Stop Distance

The distance from your entry to your stop-loss, in percent. Example: the stop lies 4.32 % below the entry.

Step 3: The Position Size

Position size = risk ÷ stop distance. In the example: $200 ÷ 4.32 % = $4,630 – about 46 % of the account. If the stop is hit, the position loses 4.32 % of $4,630, which is $200: exactly the planned 2 %.

Step 4: Margin and Leverage

On futures you do not pay the whole position – you lock a part of it as margin. Leverage = position ÷ margin. The same position with different leverage:

The loss stays $200 in every row: leverage does not change your risk as long as the position size stays the same. Our entry message for this example reads: “Position size: 46 % of your account (2 % risk)” and “Leverage: 2x (isolated, margin 23 % of your account)”. You set the leverage on your exchange, enter the position size – done.

Why Leverage Still Matters

The higher the leverage, the less margin – and the closer the liquidation price moves to your entry. If it comes closer than your stop, the exchange can close the trade before your stop does, with a bigger loss. That is why our entry messages use the smallest whole-number leverage that keeps the margin at most 1/3 of your account: the stop stays well before any liquidation, and three trades always fit.

Isolated or Cross Margin?

With isolated margin, each trade has its own margin – a trade can never take more than that. With cross margin, your whole balance backs every position, and one bad trade can reach the rest of the account. Our signals use isolated margin.

What Counts as “Your Account”?

Your free balance plus the margin in your open trades – without their open profit or loss. Example: one trade is open with $3,000 margin and $7,000 is free – your account is $10,000, and the next position is its percentage of those $10,000. Work it out at every entry, so the size grows and shrinks with your account.

The video “Leverage and Margin” on our home page shows it step by step.

More guides: What is trend following? · What is a stop-loss?

Not financial advice. Trading crypto futures is highly risky, and you can lose all the money in your trading account. Past results do not guarantee future results. Read our risk disclaimer.