Position Sizing - Trading Glossary

Position sizing is the foundation of disciplined trading on AsterDEX. It determines how much of your total capital you risk on each trade, balancing potential returns against account preservation.

Core Position Sizing Rules

The 1% Rule

Never risk more than 1-2% of your account on a single trade:

Position Size = (Account Balance × Risk %) / (Entry Price - Stop Loss Price)

AsterDEX-Specific Calculations

For Perpetual Pro (leverage trading):

• Account size: $10,000
• Risk per trade: 1% = $100
• Entry: $45,000 BTC
• Stop loss: $44,000 BTC
• Risk per unit: $1,000
• Position size: $100 ÷ $1,000 = 0.1 BTC

For 1001x Simple (high leverage):

• Use even smaller position sizes (0.1-0.5% risk)
• High leverage amplifies both gains and losses
• Account for wider stop losses due to volatility

Position Sizing by Strategy Type

Advanced Sizing Techniques

Kelly Criterion

For experienced traders with proven edge:

Position Size = (Win Rate × Average Win - Average Loss) / Average Win

Volatility-Adjusted Sizing

Scale down position size during high volatility periods:

• VIX > 30: Reduce size by 50%
• Market gaps > 2%: Reduce size by 25%
• Major news events: Consider flat positions

AsterDEX Platform Considerations

Minimum Position Sizes

• Perpetual Pro: $10 minimum per position
• 1001x Simple: $5 minimum per intent
• Spot Trading: No minimum (gas fees apply)

Margin Requirements

• Cross Margin: Size across all positions
• Isolated Margin: Size per individual position
• Multi-Asset Mode: Size based on portfolio value

Risk Management Integration

Stop Loss Placement

• Always set stops before entering
• Size position to risk predetermined amount
• Account for slippage on stop execution

Portfolio Heat

Total risk across all open positions:

• Conservative: 3-5% total portfolio risk
• Moderate: 5-8% total portfolio risk
• Aggressive: 8-12% total portfolio risk

Common Position Sizing Mistakes

1. Revenge Trading: Doubling position size after losses
2. FOMO Sizing: Increasing size on “sure thing” trades
3. Ignoring Correlation: Oversizing correlated positions
4. Platform Confusion: Not accounting for leverage differences

Position Sizing Checklist

Before every trade:

1. ✅ Calculate maximum risk in dollars
2. ✅ Determine stop loss level
3. ✅ Calculate appropriate position size
4. ✅ Verify leverage settings match plan
5. ✅ Check total portfolio heat
6. ✅ Confirm sufficient margin available

Proper position sizing protects your account during inevitable losing streaks while allowing sufficient size to profit from winning trades.