A trading screen shows three open positions, each carrying a planned loss of 40 USDT. Beside an account balance of 4,000 USDT, each line appears to risk just one per cent. The presentation is tidy. What it does not show is whether the same 40 USDT allowance has effectively been assigned three times.
BitcoinMargin’s position size calculator provides a tool for examining an individual scenario. That is a starting point, not a portfolio verdict. Before combining several outputs, the inputs need a shared account balance, a consistent currency and an explicit rule about whether the allowance belongs to one position or the whole group.
The missing word is total
Suppose the three hypothetical positions are open at the same time. Each has a separately estimated loss of 40 USDT if its intended exit executes at the assumed price. Adding those scenario amounts gives 120 USDT, or three per cent of the stated 4,000-USDT balance. The arithmetic has not become more complicated because the positions have different names.
These invented amounts are not recommended allocations. They expose a labelling problem. A field called risk per trade and a field called total open risk answer different questions. A person can choose the same numerical allowance for every line and accidentally overlook what that choice implies for the combined account.
The CME Group position-sizing lesson connects an individual size calculation to the proposed stop and the amount designated for that trade. Extending that reasoning to several simultaneous positions requires another decision. It does not happen automatically when the calculator is opened again.
Different symbols do not establish independence
Three ticker symbols might represent different assets, but their names alone say nothing about how their prices will behave together. A broad market shock could affect all three. Even a carefully measured historical relationship would describe a particular observation window, not promise the same relationship during the next disruption.
Investor.gov’s diversification explanation makes a related distinction for investments: several holdings can still overlap, and a narrowly focused fund does not necessarily provide diversification. That general principle does not certify any collection of crypto positions as diversified. It is a reason to investigate what the positions actually share.
For a simple stress exercise, assume all three example exits are reached in the same episode. The combined planned loss remains 120 USDT before costs and execution differences. No correlation estimate is needed to ask that conditional question. It is a deliberately specified scenario, not a forecast of how frequently it will occur.
A sum is useful, but it is not a loss ceiling
The 120-USDT total depends on the assumed exits. If an order fills at a different price, its realized loss changes. Fees and funding may add costs, while contract design can change the calculation. A stop instruction is not an insurance policy guaranteeing the amount typed into a form.
The CFTC’s virtual-currency trading advisory warns about volatility and the additional risks of leverage. Calling a figure planned risk should preserve that uncertainty, not conceal it. In this example, 120 USDT is a sum of modelled outcomes under stated assumptions, not the account’s maximum possible loss.
There is also a practical boundary between positions. If a venue uses shared collateral, available funds and other positions can affect the account together. Three independent worksheets cannot establish how that venue will calculate maintenance requirements or liquidate an account. Its current contract and margin rules remain necessary evidence.
Do not subtract a hedge before defining it
An opposite-direction position can make an account look balanced. But subtracting its notional value from another position does not, by itself, demonstrate that losses cancel. The instruments may differ in contract size, settlement currency, price reference or timing. Costs can accrue on both sides.
Keep gross exposure visible while examining the relationship. A claimed offset deserves its own scenario, including what happens if only one order fills or one position closes first. Otherwise the spreadsheet can turn a proposed hedge into an assumed guarantee before anyone has checked the mechanism.
Bring the combined result back to the inputs
After the first calculation, return to the same sizing worksheet for each line rather than changing several assumptions at once. Retain the original entry, intended exit, quantity and cost exclusions. Then compare the combined scenario with the allowance that was actually intended for the group.
If the group was meant to share a single 40-USDT allowance, three separate 40-USDT estimates have not met that condition. The correct next step is to revisit the assumptions, not relabel 120 as 40 or assume the positions cannot lose together. A calculator can organize individual inputs; only an explicit account-level view reveals when several sensible-looking lines spend the same allowance repeatedly.
This is an educational illustration of scenario accounting, not advice to open, hedge or size a crypto position. The numbers are invented, and the example neither predicts market behaviour nor establishes a safe loss level.
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Disclaimer: The content on this page is for informational purposes only and does not constitute financial advice. Always do your own research before making investment decisions.
Conflicts of interest
I have no current legal practice or retainer relationships with any cryptocurrency company. Past employment relationships are listed publicly.
