In crypto a move of a tenth in a single day is not rare, and for smaller coins it is ordinary. A position size carried over from stock trading, where such a day would be an event, takes far more risk here than the trader intends. The fix is to size from the coin’s range.
Money at risk, not money invested
The amount put into a position is not the risk. The risk is what the position can lose on a normal bad day. That is the amount invested multiplied by how far the coin can travel against you. Two positions of equal size in a calm coin and a wild coin carry very different risk, though they look the same on the account screen.
Start from the loss you accept
The usual method runs backward from the loss. Decide what share of the account one trade may lose. Decide where the trade is wrong, which sets the distance to the stop. Divide the first by the second and you have the position size. A wider stop means a smaller position, and the money at risk stays the same.
In crypto the stop has to be wide enough to sit outside the coin’s ordinary noise. A stop inside the normal daily range gets hit by a normal day. So a volatile coin forces a wide stop, and a wide stop forces a small position. ATR stop distance covers one way to measure that noise.
The range is not constant
A coin’s range changes. Quiet weeks are followed by violent ones, and volatility tends to arrive in clusters. A size set during a calm stretch is too large when the range doubles. Sizing from the range means remeasuring it, and letting the position shrink when the coin gets louder.
The stop is not a promise
A stop names the price where you intend to exit. It does not set the price where you will. In a fast move or a thin hour the fill can land well beyond it. So the loss used for sizing should be the realistic one, with room for a bad fill. Size off the worst case makes that argument in general, and where to put a stop when liquidity is thin covers the crypto case.
One coin is not the whole account
Sizing each position from its own range is half the job. Most coins fall together when the market falls. Five positions, each sized correctly alone, can lose as one. Ten positions, one bet covers why the total has to be checked as well.
What the method gives you
It gives a position you can hold through a normal day without being forced out, and a loss you chose before the trade when the stop is reached. It does not make the trade right. It makes the cost of being wrong a known amount. In a market where a tenth in a day is routine, that is the part of the outcome a trader actually controls.