In short
Your real risk is the sum of what every open trade can lose at once, not each position on its own. To track it, write down the dollar risk of each trade, which is entry minus stop times position size. Add those numbers together. Compare the total against a ceiling you set in advance, often one to two percent of the account per trade. Correlated coins move together, so count them as near one bet. Review the whole book weekly, trim size when the total drifts over your limit, and your worst day stays survivable.
Why does per-trade risk hide your real exposure?
Each trade looks safe because you size it to lose only a small slice, maybe one percent. The trap is the total. Five one-percent trades open together risk five percent at once, and correlated ones can behave like a single larger bet.
You manage trades one ticket at a time. You set a stop, size the position, and feel in control of that bet. The account does not work that way. It carries every open trade at once, so your real exposure is the pile, not the ticket.
The hidden cost shows up on the bad day. Markets fall together more often than they rise together. When sentiment turns, five small positions can all slide toward their stops in the same hour, and the one percent you planned becomes five.
What is different here
The ParadiseTeam totals open-book risk across all major exchanges before adding a setup, so one more trade never quietly pushes the account past its ceiling.
Defining risk per trade: entry, stop and size
Risk per trade is the money you lose if a position hits its stop. The formula is simple: entry price minus stop price, times the position size. That dollar figure, not the coin’s total value, is what you are actually risking on the trade.
- Entry: the price you actually filled at.
- Stop: the price where the trade is wrong.
- Size: how many coins or contracts you hold.
Keep every open trade recorded this way before you worry about the total. A trade without a stop has undefined risk, which means you cannot add it to anything. Write the plan first. Our note on building a trade plan covers where the stop belongs.
Position size is the dial that sets this number, a point exchange guidance on position sizing makes plainly. Get the size right and the per-trade figure falls into place.
How do you add up risk across all open positions?
Convert each open trade into its dollar risk, then add every figure into one total. Divide that total by your account size to get your combined risk as a percentage. That single percentage, checked against your ceiling, tells you whether the whole book is safe.
An example makes it concrete. Say your account holds 10,000 dollars and you run four trades, each planned to lose about one percent.
| Trade | Dollar risk | Account % |
|---|---|---|
| BTC long | $110 | 1.1% |
| ETH long | $95 | 0.95% |
| SOL long | $120 | 1.2% |
| LINK long | $100 | 1.0% |
| Total | $425 | 4.25% |
Alone, each ticket looks tame. Together they put 425 dollars, or 4.25 percent, on the line at once. Add one more trade and you can quietly cross five percent without noticing, which is exactly how an account bleeds on a single rough day.
Setting a total account risk ceiling you respect
A ceiling is the maximum combined risk you allow across the whole book, decided before you trade. Pick a number you can sit through on a bad week, often around five to six percent total. Write it down, because a limit you only remember is a limit you will break.
The ceiling does the deciding for you when you are tempted. A new setup looks perfect, but the book already sits at your limit. The rule is clear: close or trim something first, or skip the trade. A limit you negotiate with in the moment is not really a limit. Risk first, trade second, as Simon Mach frames the habit.
How do correlated trades inflate your true risk?
Correlated trades move together, so they stop out together. If you hold several altcoins that all track Bitcoin, you do not really hold several bets. You hold one larger bet wearing different tickers, and your true risk is far above the sum of the labels.
Correlation measures how closely two assets move in the same direction, on a scale from minus one to plus one. Most altcoins sit high and positive against Bitcoin. The reference definition of correlation explains the maths. The trading lesson is blunt: count a cluster of correlated coins as close to one position when you total your risk.
Hidden links reach beyond price charts too. A stablecoin losing its peg can hit every position you hold at once, since it touches pricing and liquidity across the market. Treat shared exposure as shared risk.
Adjusting with trailing stops and partial exits
Your total risk is not fixed once trades are open. Every time a stop moves or you take money off the table, the book’s combined risk changes, and usually for the better.
A trailing stop that protects a gain can lift your stop to break even, which drops that trade’s risk to zero in your total. Partial exits do the same by cutting size. Both tools let you keep upside open while shrinking the number you are tracking.
A weekly routine to review your open-book risk
A total you calculated last Monday is already stale. Prices moved, stops trailed, and some trades closed. Set a fixed weekly slot to rebuild the number from scratch, and repeat the check before every new entry.
- List every open trade with its current stop.
- Work out the dollar risk of each one.
- Add them into a single combined total.
- Divide by account size for your real percentage.
- Trim or close until the total sits under your ceiling.
This routine takes a few minutes and removes the guesswork. You stop asking whether the book feels risky and start reading a number you trust. That number, kept under a ceiling you set in advance, is how a rough day stays a rough day instead of a ruined account.
Frequently asked questions
What is total risk across open trades?
Total risk is the sum of what every open position can lose if each one hits its stop at once. You get it by adding the dollar risk of each trade. It matters more than any single ticket, because the account holds all trades together.
How much total risk is too much?
Many disciplined traders cap total open risk near five to six percent of the account, with each trade near one percent. The right number is personal. Set it in advance, write it down, and trim size whenever your open book drifts above it.
Do correlated trades count as one risk?
Treat strongly correlated trades as close to a single bet. If three altcoins usually move with Bitcoin, a sharp drop can hit all three stops together. Add their risk as one block, not three small, separate ones, when you judge your ceiling.
How often should I review open-book risk?
Review your full open book at least weekly, and again before you add any new trade. Prices move, so stops and position values drift, which changes the total. A quick weekly check keeps the real number in front of you instead of a stale estimate.
Crypto trading involves substantial risk and is not suitable for everyone. Nothing here is financial advice; it is education only. Never risk more than you can afford to lose.
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