Position Sizing in Crypto: How Much Should You Put Into Each Coin?

Position sizing is one of the most overlooked skills in crypto. Most people spend hours researching which coin to buy. Almost nobody asks how much to buy. That question matters just as much.

Why Your Allocation Can Hurt You More Than a Bad Pick

Even great research can blow up your account if you size a position wrong. A coin you are 80% confident in can still drop 60% before recovering. If you put 40% of your portfolio into it, that one trade erases a quarter of your net worth. Smart sizing is what keeps a bad trade from becoming a disaster.

The Most Common Rule: Never Risk More Than 1-2% Per Trade

Professional traders often cap their risk at 1-2% of total portfolio value per trade. This sounds conservative. That is the point. If you have a $10,000 portfolio and you risk 2% per trade, you can take 50 consecutive losses before wiping out. That gives you room to learn, adapt, and survive.

To apply this:

• Decide your stop-loss level before you enter a trade.
• Calculate the distance between your entry and stop-loss as a percentage.
• Size your position so that hitting the stop-loss costs you only 1-2% of total portfolio value.

Fixed Percentage or Conviction-Weighted: Which One Works?

Some investors keep every position the same size. Simple, easy to manage, reduces bias. Others weight positions by conviction, putting more into high-confidence ideas and less into speculative bets. Both approaches work. The danger with conviction-weighted sizing is that confidence and accuracy are not the same thing. You can be very confident and still be wrong.

A common hybrid: set a base allocation of 5% per position and allow yourself to go up to 10% for your highest-conviction picks. Set a hard ceiling and stick to it.

How Many Coins Is Too Many?

Spreading too thin kills returns. Holding 30 coins sounds diversified, but you probably do not understand all of them deeply. You also cannot track them all effectively. Most experienced crypto investors keep between 5 and 15 positions, which is enough diversification to manage risk without losing focus.

Your Portfolio Needs a Risk Budget Before You Build It

Think of your total risk as a budget you cannot overspend. If you are running 10 positions at 2% risk each, your worst-case drawdown is around 20%. Know that number before you build your portfolio, not after. Position sizing is not just about each individual trade. It is about how all your trades interact together.