Reference
Risk Management
Good signals are only half of the equation. Risk management — position sizing, stop-loss mechanics, and circuit breakers — determines whether you stay solvent long enough to benefit from those signals.
DisclaimerThis page is educational guidance, not financial advice. Crypto markets are highly volatile. Losses can exceed your initial investment when using leverage.
Position sizing
The most important variable you control is how much to allocate to each trade. PyreFi recommends the fixed-risk method: risk a defined percentage of your total portfolio on each trade.
Fixed-risk formula
Position Size = (Portfolio × Risk%) ÷ (Entry − Stop Loss)Example: $10,000 portfolio, 2% risk, ETH entry $3,200, stop $3,000. Risk amount = $200. Position size = 200 ÷ (3,200 − 3,000) = 1 ETH.
| Risk level | % per trade | Suitable for |
|---|---|---|
| Conservative | 0.5–1% | Capital preservation, new traders, uncertain markets |
| Balanced | 1–2% | Active traders with a defined edge and track record |
| Aggressive | 2–5% | Experienced traders in high-conviction setups only |
| Speculative | >5% | Not recommended — ruin risk is very high over many trades |
Stop-loss mechanics
Every PyreFi signal includes a stop-loss level, sized as a distance from entry based on the token's current volatility (its Average True Range, or ATR) — see Signal Metrics & Trade Plans for exactly how it's calculated. The guidance below is general risk-management practice for using that stop once you have it.
Volatility-adjusted sizing
A more volatile token gets a wider stop, a calmer token gets a tighter one — this is already built into the level PyreFi gives you. A tight stop on a high-volatility token would get hit by normal noise before the real move plays out.
Never move stops against the trade
Moving a stop further from entry to 'give the trade more room' increases loss if the stop is hit. If the original stop level was wrong, close the position — do not adjust the stop.
Trailing stops after TP1
Once price hits TP1, consider moving your stop to breakeven or just above entry. This converts the trade to risk-free and lets the remaining position run toward TP2.
Exchange auto-trade
Pro includes Binance/Bybit auto-trade as a plan feature. Self-serve setup isn't in the app yet, so specifics like loss limits and circuit breakers depend on how your account is configured — contact support if you're on Pro and want this set up. Whatever automation you use, keep applying the position-sizing and stop-loss discipline on this page — automation doesn't remove the need for it.
Portfolio-level risk
How many open positions should I hold?
This depends on your portfolio size and strategy. As a starting framework: hold no more than 5–8 open positions simultaneously. More than this makes it difficult to monitor stops and tends to produce correlated losses in downturns — crypto tokens move together during market-wide selloffs.
Should I trade correlated tokens?
With caution. BTC, ETH, and most altcoins are highly correlated in drawdowns. A signal on both SOL and AVAX during a risk-off environment may result in both stop-losses hitting simultaneously. Treat highly correlated positions as a single larger bet.
What is the role of cash/stablecoins?
Holding cash is a position. During periods of high market uncertainty (extreme Fear & Greed readings, macro events), reducing exposure by increasing stablecoin allocation is a valid strategy. PyreFi's Fear & Greed Index and Risk Lens score can help identify these windows.
What leverage does PyreFi recommend?
PyreFi signals are designed for spot trading. If you use leverage, keep it low (2–3x maximum). Higher leverage compresses the stop-loss distance needed to achieve the same risk amount, making it harder to use structure-based stops without excessive position size.