Crypto Trading Essentials: Risk Control, Stop-Loss and Position Sizing

In crypto trading, effective risk control and position management are critical to preserving capital. Every trade must include a clearly defined stop-loss placed at a price level where your initial market thesis is invalidated. Begin by formulating your stop-loss logic—identifying when market moves refute your entry rationale—then decide the maximum loss you can accept per trade. Use risk control measures to prevent excessive drawdowns by calibrating position size based on a predefined loss limit. Avoid arbitrary stop placements and overleveraging: if your stop-loss distance is 10%, leverage should not exceed 10× to prevent forced liquidation. Treat each additional position as an independent trade with its own entry and exit plan. Properly applied, these strategies help traders manage drawdowns, optimize capital allocation, and enhance long-term profitability.