Portfolio & risk
Position sizing: calculate your maximum loss
Most damage in crypto comes not from the wrong coin but from too large a position in the right coin at the wrong time. Position size is the one lever fully under your control.
Start from the loss, not the gain
Decide how much you are willing to lose on this position as a percentage of your total portfolio. For a satellite, 0.5% to 2% is common.
Divide that by the drawdown you are willing to sit through. Willing to lose 1,000 euro and accept a 50% fall? Your position is 2,000 euro.
Adjust for volatility
A coin that moves 10% daily needs a smaller position than bitcoin. Scale inversely with volatility relative to bitcoin.
If an altcoin moves roughly twice as hard, take half the size for the same risk budget.
Concentration and total limits
Set theme limits alongside position limits. Five layer-2 tokens are one bet, not five positions.
Use hard maxima: never more than 10% in one altcoin, never more than 25% in one theme.
- Max loss per position: 0.5-2% of the portfolio
- Scale with volatility versus bitcoin
- Theme limit next to position limit
Leverage, and why we advise against it
With leverage an ordinary correction becomes a liquidation. The maths above only works if the position can fall without forced selling.
If you use leverage anyway, work from the liquidation price and assume it is closer than the chart suggests during illiquid moments.
Frequently asked questions
What is a safe position size?
One where your accepted maximum loss is no more than 0.5% to 2% of the total portfolio.
Should I use stop-losses?
In volatile crypto markets stops are often hit by temporary wicks; for long-term positions a smaller size is usually the better brake.
How many positions do I need?
Five to ten well-understood positions is plenty for most investors.
Read next
Building a crypto portfolio without guesswork
How to split capital across bitcoin, altcoins, equities and cash. A sober framework with percentages, horizon and risk limits.
Rebalancing without emotion
When and how to return your crypto portfolio to target weights — with bands, costs and tax in mind.
Drawdowns: the price of crypto returns
Bitcoin's historical drawdowns, why recovery is mathematically hard and how to build a plan that carries you through a bear market.