Position size is calculated before entry, working back from the stop. First you decide how many USDT you are ready to lose on the trade, then you derive the quantity of the asset from that. Below is the formula for a linear USDT contract. All numbers are for training.
What data you need before calculating
R, cash risk (USDT): the amount you lose if the stop is hit. Set it in advance.
E, entry price (USDT).
S, stop price (USDT): the point where the scenario is cancelled. Size is fitted to the stop, not the other way around.
c, cost per unit (USDT/unit): entry and exit fees plus a slippage reserve.
Trading capital is needed to set R and check margin.
The asset quantity formula
Q = R ÷ (|E − S| + c)
Q is in units of the base asset (for example, BTC); the other values are in USDT. The units match: USDT ÷ (USDT/unit) = units.
Training example: trading capital 1000 USDT, R = 5 USDT, entry 100, stop 99.
Without costs: Q = 5 ÷ (100 − 99) = 5 units, notional 5 × 100 = 500 USDT.
With costs of 0.10 USDT/unit: Q = 5 ÷ 1.10 ≈ 4.545 units.
Working from a percentage? Convert it to a fraction: a 1% stop is 0.01, and 5 ÷ 0.01 = 500 USDT. That is notional, not quantity (500 ÷ 100 = 5 units).
How to convert quantity into notional and margin
Notional = Q × E, margin = notional ÷ leverage.
Metric | Q without costs | Q with costs |
Quantity, units | 5 | 4.545 |
Notional, USDT | 500 | 454.5 |
Margin at 5x, USDT | 100 | 90.9 |
Loss at the stop incl. costs, USDT | 5.50 | 5.00 |
Training example, costs 0.10 USDT/unit.
Leverage does not change Q or the loss at the stop; it only sets how much margin is locked. Margin is not the maximum loss, and the stop must sit closer than the liquidation price.
How to add fees and an execution reserve
c = entry fee + exit fee + slippage reserve, in USDT per unit. Take the rates from your exchange's fee schedule. If the position is held through a funding payment, add that too.
The conditional loss budget per unit in the example: |E − S| + c = 1.10 USDT. Without this adjustment the loss at the stop rises to 5.50 USDT. The cost estimate is conditional: in a fast market the stop can fill worse than calculated.
How to check instrument limits
An instrument has a quantity step and a minimum order. If quantity is set in lots, divide Q by the contract size.
Round down. With a 0.01 step you get 4.54 units, margin ≈ 90.8 USDT, loss at the stop ≈ 4.99 USDT. Rounding up to 4.55 would give ≈ 5.005 USDT, above the limit. If rounding down leaves less than the minimum order, skip the trade, but do not raise the risk or the leverage.
The model is linear. For inverse contracts, margin and P&L are in the coin; take their formula from the exchange specification.
Checklist before sending the order
R is set in advance, and the stop distance and costs are calculated in USDT, not in percent or coins.
Q includes costs and is rounded down to the step.
Notional and margin fit within your capital, and the stop is closer than liquidation.
The contract is linear, not inverse.
Moved your entry or stop? Recalculate Q: the old size no longer matches your risk.
FAQ
No. Size sets the quantity and notional; margin is the collateral behind them.
The farther the stop, the larger the loss per unit. With the same R, the quantity is smaller.
Yes. The trade result is reduced by both the entry and exit fees, plus funding if you hold through a payment.
Down, to the instrument's step. Then the risk will not exceed R.
No. It is built for a linear contract settled in USDT.
Conclusion and next step
Size follows from risk and the stop: any change in entry, stop or costs requires a new calculation.
If you want to add training and trade review to your own practice, take a look at the Impulse+ format from Peterson Trade: trade review helps you check whether you stuck to your risk calculation.