# Risk Guide

How a sub-Kelly fraction (half/quarter) turns your capital, risk appetite and your own trade statistics into a position size, with the formula written out.

Source: https://bykaranteli.com/risk-guide · attribute to ByKaranteli and quote the timestamp.

## Why Kelly?

- **Conservative (¼ Kelly):**  slow growth, shallow drawdowns.
- **Balanced (½ Kelly):**  the textbook default.
- **Aggressive (¾ Kelly):**  faster growth but deeper drawdowns.

## Important Notes

- **not investment advice** , educational only.
- The smaller the sample, the less reliable the Kelly fraction; use enough closed trades from the market you trade now.
- Derivatives + leverage risk: losing all capital is possible.
- Placing orders is your responsibility; ByKaranteli does not auto-trade.

## Position sizing FAQ

### How do I calculate position size for crypto futures?

Decide the maximum percentage of your account you are willing to lose if the stop hits, then divide that risk amount by the distance between entry and stop-loss. Position size = (account x risk %) / (entry - stop distance). Leverage only changes the margin you post, not the loss at the stop; size from the stop distance, never from the leverage slider.

### What is the Kelly criterion in trading?

Kelly is a formula that converts your win rate and average win/loss ratio into the bankroll fraction that maximizes long-run growth. Full Kelly is aggressive and assumes your statistics are exact, so practitioners trade half-Kelly or quarter-Kelly. Feed it your own closed-trade statistics; the platform publishes recorded market data, not a trade record to size from.

### How much should I risk per trade?

Common practice for leveraged crypto is 0.5% to 2% of the account per trade. Our conservative profile corresponds to quarter-Kelly, balanced to half-Kelly; with a small or negative measured edge the honest answer is to size at the minimum or not take the trade at all. The formula shows exactly that when your statistics say so.

### Does leverage change my risk?

Not by itself. Your loss at the stop is fixed by position size times stop distance; leverage determines how much margin you lock and how close the liquidation price sits. High leverage mainly adds liquidation risk before your stop can do its job, which is why the liquidation calculator pairs with this page.

Not investment advice.  Kelly is a statistical tool; past statistics lose validity as market conditions change.

## Related

- https://bykaranteli.com/tools/position-size
- https://bykaranteli.com/tools/liq-calc

Everything in one fetch: https://bykaranteli.com/llms-full.txt