Crypto Swing Risk Management: Position Sizing for 30-50% Drawdowns

Standard forex/equity risk management doesn't translate directly to crypto without adjustment. Here's a framework built for crypto's unique volatility: **Adjusting for crypto volatility:** BTC's average daily volatility is ~3–5% (vs EUR/USD at 0.5–0.8%). This means a "normal" 2% account risk per trade requires a stop of only ~40 pips on forex but 10–15% on BTC. **Crypto-specific position sizing formula:** Max account risk: 1–1.5% per trade Stop distance: 10–15% for BTC, 15–20% for ETH, 20–30% for altcoins Position size = (Account × 1%) ÷ (Stop % × Entry Price) Example: $20,000 account, 1% risk = $200, BTC at $65,000, stop at $57,500 (11.5%) Position size: $200 ÷ (11.5% × $65,000) = 0.027 BTC **The leverage danger zone:** Crypto exchanges offer 10–100× leverage. At 10×, a 10% BTC drawdown = 100% account loss. Experienced crypto traders use 1–3× MAXIMUM. **Correlation management:** All altcoins correlate strongly with BTC. Diversifying across 10 altcoins isn't diversification — it's concentrated crypto risk. What leverage level do you use for crypto swings?