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What Is the 1% Risk Rule in Crypto Trading？

The 1% Risk Rule means:
In any single trade, your maximum possible loss must not exceed 1% of your total account equity.
This does NOT mean:
You can only use 1% of your capital to open a positionYou cannot use leverage
It means:
You may use any position sizeYou may trade spot or futuresYou may use 5x, 10x, or even higher leverage
👉 As long as your stop-loss is hit, the total loss must be ≤ 1% of your account.
Why the 1% Rule Is Essential in Crypto (More Than Any Other Market)
Crypto markets are uniquely dangerous:
24/7 trading → overtrading riskExtreme volatility → large intraday swingsHigh leverage → emotional amplificationFrequent wicks & stop huntsBlack swan events (liquidations, news, exchange issues)
In crypto, most accounts don’t die from bad analysis.
They die from one oversized loss.
The 1% rule exists to prevent that.
Common Crypto Mistake:
“If I use 30% of my capital, I’m risking 30%”
This is false.
Risk is defined by:
Stop-loss distancePosition size
You can deploy 50% or even 100% of your margin,
and still risk only 1%, if the stop is calculated correctly.
Practical Futures Example (USDT-M Contract)

Account equity: $10,000Risk per trade: 1% = $100Entry: BTC at $60,000Stop-loss: $59,400 (1% stop)
👉 Maximum position size =
$100 ÷ 1% = $10,000 notional
You may choose:
1x → $10,000 margin5x → $2,000 margin10x → $1,000 margin
Leverage changes margin usage — not risk.
Risk Guidelines by Trading Style (Crypto-Specific)
Intraday / Scalping
Risk per trade: 0.5% – 1%Daily max loss: 2% → stop tradingHard stop-loss required
Swing Trading
Risk per trade: ≤ 1% (beginners: 0.5–0.75%)Wider stops → smaller sizeBest for BTC / ETH trends
Altcoins
Higher volatility & thinner liquidityRecommended risk: ≤ 0.5%Or total alt exposure ≤ 20% of account
⚠️ Exchange Wick & Stop-Hunt Rules

(Critical for Crypto Traders)
Wicks are not accidents — they are structural.
Crypto exchanges operate in environments with:
Thin liquidity at key levelsHigh leverage concentrationLiquidation cascades
To survive, you need wick-aware rules.
Rule 1: Never Place Stops at Obvious Levels
Avoid:
Exact highs/lowsEqual highs/lowsRound numbers
Instead:
Place stops beyond structureUse volatility-adjusted buffers
📌 If everyone sees the level, the market will test it.
Rule 2: Use Reduced Size, Not Wider Stops
Do NOT:
Move stops endlessly“Give it more room” emotionally
Instead:
Keep the same structure-based stopReduce position size to maintain 1% risk
Rule 3: Expect Partial Losses from Wicks
In crypto:
A planned -1% loss may become -1.2% or -1.5%Slippage and wick-throughs are normal
This is acceptable.
👉 1.5% loss ≫ liquidation
Rule 4: Re-entry Is a Skill, Not a Failure
Being wicked out does NOT mean:
Your idea was wrongThe setup failed
Professional traders:
Accept the stopRe-enter if structure remains valid
Paying small losses is the cost of staying alive.
Rule 5: Reduce Risk Before High-Risk Events
Before:
CPI / FOMCMajor newsWeekend low liquidity
Do one of the following:
Cut risk to 0.25%–0.5%Close positions entirely
Gap risk + leverage = account killer.
Risk–Reward Still Matters More Than Win Rate
With the 1% rule:
Loss: -1RTarget: +3R to +5R
Even with a 40% win rate, you can grow consistently.
High win rate + poor R:R = slow death.
Does the 1% Rule Apply to Long-Term Spot Holding?
No — if no stop-loss is used.
For long-term crypto investing:
BTC / ETH: 10–30% per assetMajor alts: 5–10%High-risk alts: ≤ 2%
Risk is controlled through allocation, not stops.
Final Takeaway for Crypto Traders
✔ Define stop-loss before entry
✔ Size positions so loss ≤ 1%
✔ Expect wicks — plan for them
✔ Favor R:R over win rate
✔ Survival > profits
Markets always offer opportunities.
Blown accounts don’t.
⚠️ Disclaimer:
This content is for educational purposes only and does not constitute financial advice. Crypto trading involves significant risk, and leveraged trading may result in losses exceeding initial capital.