2025-12-31 18:23:48

Many people ask me, why do some people make a killing while others get wiped out by a single loss, even when they both see the market correctly? The key difference lies in position sizing.

I've seen too many beginners make the same mistake—overleveraging. One mistake can turn your entire account into a complete mess. That’s why I emphasize one point: position size is not a small matter; it determines how long you can survive in this market.

Here are the three iron rules I’ve summarized:

**Rule 1: Limit risk per trade to a fixed amount.** Under any circumstances, the preset loss for a single trade must not exceed 2% of your total funds. This is not a suggestion; it’s a bottom line.

**Rule 2: Use your stop-loss to determine your position size.** Based on your stop-loss distance, calculate the maximum position you can open. For example, if you want to go long on BNB with a 5% stop-loss, and you want to risk only 2% of your total funds, then your maximum position size is 40% of your total funds.

**Rule 3: Diversify across different assets.** Don’t put all your chips into one coin. The benefit of this is that even if one position blows up, it won’t damage your core capital.

Here’s a practical example. Suppose you have 10,000 USDT and want to go long on BNB:
- Set your stop-loss at 5% below
- Maximum loss per trade: 10,000 × 2% = 200 USDT
- Maximum position size: 200 ÷ 5% = 4,000 USDT

So, you can open a position of up to 4,000 USDT. Even if your stop-loss is triggered, the maximum loss is only 200 USDT.

One last piece of advice: your market judgment influences how much you can earn, but your position management determines whether you survive or not. Having chips in hand is the only way to turn things around.

BNB2,62%

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AirdropHunter420

· 01-01 18:11

That's right, but I still often get greedy, to the point of losing everything in one go. --- I remember the 2% line, I need to change that bad habit. --- Diversification has really saved me several times; I once went all-in and ended up with nothing. --- This set of logic is clear, the key is execution. Everyone understands it, but it's just greed. --- The idea of reverse calculating position size based on stop-loss space is brilliant. When I calculated it, I realized I had been doing it backwards. --- Living is more important than making money. That hit me right in the heart. --- Once you understand, it’s about calculating the risk thoroughly and not just gambling blindly. --- I think this is the proper attitude for trading; it’s much more reliable than just predicting accuracy. --- Position management is truly a watershed; some realize it early, others have to pay tuition.

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GateUser-a606bf0c

· 2025-12-31 18:53

Honestly, I realized the 2% stop-loss a long time ago, but I just can't execute it.

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FantasyGuardian

· 2025-12-31 18:52

That's right, I've seen too many all-in blowups, really. --- That's why I never risk more than 2% of my account; only then can I make money. --- Using stop-loss to reverse position is brilliant; this way, you won't go all-in in one shot. --- Diversifying holdings has saved me several times; betting on a single coin is just gambler's mentality. --- Having the right direction is useless without position; that's the most heartbreaking truth. --- The most common mistake beginners make is greed, always thinking about getting rich overnight, but ending up losing everything overnight. --- The 2% line is a hard-earned lesson; don't take it lightly. --- I've seen people turn their fortunes around from the brink of bankruptcy through position management; it's indeed a moat. --- Many people are strong in technical analysis, but they die because they don't calculate their position sizes correctly; such a pity. --- Remember the 40% cap; it's steady and still yields good returns.

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SatoshiLeftOnRead

· 2025-12-31 18:51

That's right, position management is truly a matter of life and death. --- I've heard the 2% rule many times, but few actually follow it. --- The idea of reverse position sizing is pretty good; finally someone explained it clearly. --- I just didn't stick to that 2% line, lost everything in one go, and now looking at this article, it's a bit late. --- Diversifying assets is correct, but to be honest, most people simply can't do it. --- Bro, your example is spot on; the real problem is that when trading, you simply can't stay calm enough to do this. --- Living is more important than making money, and this really hit me. --- I've seen too many people who, after a total liquidation, never recover; indeed, you should be cautious about position sizing. --- The explanation of stop-loss is good; but most people set it and then are reluctant to trigger it. --- Same old story, knowing and doing are two different things.

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PumpDetector

· 2025-12-31 18:45

yeah this 2% rule hits different when you're down 60% already ngl

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BloodInStreets

· 2025-12-31 18:42

That's right, but I've seen too many people who know this still go all-in... Honestly, relying only on 2% and stop-losses can't save those who want to bottom fish.

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AlwaysQuestioning

· 2025-12-31 18:37

It's true, but I'm just worried that my hand will shake during execution.

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