Learn how to size positions, calculate risk/reward ratios, and manage portfolio risk. A quantitative approach to surviving and thriving in leveraged trading.
Position sizing determines how much capital you allocate to a single trade. It is arguably the most important factor in long-term trading success — more important than entry timing.
| Variable | Example |
|---|---|
| Account Balance | $10,000 |
| Risk Per Trade (2%) | $200 |
| Stop-Loss Distance | 2% from entry |
| Position Size | $200 / 2% = $10,000 (1x) |
| With 5x Leverage | $10,000 position using $2,000 margin |
The key insight: your leverage and position size should be derived from your risk tolerance and stop-loss placement — not the other way around.
The risk/reward (R/R) ratio compares what you stand to lose against what you stand to gain. It's the single most important filter for trade selection.
Risk $100 to make $100. Requires >50% win rate to be profitable. Generally not worth taking.
Risk $100 to make $200. Profitable with just 34%+ win rate. A good minimum threshold.
Risk $100 to make $300. Profitable with just 26%+ win rate. The gold standard for swing trades.
Where you place your take-profit (TP) and stop-loss (SL) determines your risk/reward. Poor placement leads to either premature exits or unnecessary losses.
Manage risk on Dexly
Your margin mode choice affects how risk is distributed across your positions. For a detailed explanation of isolated vs. cross margin mechanics, see our Leverage & Liquidation guide.
| Scenario | Recommended Mode | Why |
|---|---|---|
| Single high-leverage trade | Isolated | Caps loss to allocated margin only |
| Hedged long + short portfolio | Cross | Gains from one offset losses on the other |
| New trader, learning | Isolated | Prevents entire account loss from one mistake |
| Experienced, multi-position | Cross | Better capital efficiency across positions |
Individual trade risk is only part of the picture. These portfolio-level rules prevent systemic losses:
Never have more than 6-10% of your total capital at risk across all open positions combined. If you risk 2% per trade, that means 3-5 concurrent trades max.
Long BTC + long ETH + long SOL = three correlated bets on crypto going up. Treat correlated positions as a single risk unit.
Stop trading for the day after losing 3-5% of your capital. Emotional trading after losses compounds the damage.
Increase position sizes gradually as your account grows. Never increase size after a losing streak to "make it back."
Risk management is a skill that improves with practice. Start small, track every trade, and review your R/R ratios weekly.
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Risk Warning: Trading perpetual futures involves significant risk of loss. Only trade with capital you can afford to lose. Dexly is a non-custodial interface; you are responsible for your own funds and trading decisions.
Manage risk on Dexly
