STRATEGY Strategy · Updated May 2026 · ~4 min · For TradingView desktop 3.2.1

Crypto Stops & Position Sizing: Fixed-Fractional and Kelly

TradingView crypto position sizing illustration

Crypto is extremely volatile, with leverage and 24/7 liquidations — position sizing decides whether you survive to profit more than coin selection does. A great strategy still goes to zero on one oversized liquidation.

Fixed-fractional risk

The core: the max loss per trade is a fixed fraction of total capital (say 1%). The formula:

size = (capital × risk%) ÷ (entry − stop)

Set the stop first (the technical invalidation), then back out the size — not "how much to buy" off the cuff. However near or far the stop, each loss is capped at 1% — ten losses in a row is ~10%, still recoverable.

Kelly and half-Kelly

The Kelly formula gives the "long-term compounding optimal" bet, but it's very sensitive to inputs and extremely volatile. Almost no one uses full Kelly — most use half-Kelly or less for a smoother equity curve. In crypto, conservative always outlives aggressive.

Leverage warning: leverage shortens your liquidation distance. 10× means roughly a 10% adverse move liquidates you — and 10% intraday is routine in crypto. Check the liquidation map and don't put your liquidation price in the same dense band everyone uses.

Crypto Stops & Position Sizing: Fixed-Fractional and Kelly

Fixed-fractional risk

Kelly and half-Kelly

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