Position Sizing, Funding Rates, and Averaging Down: The Math Behind These Calculators
Skip to calculators ↓Most trading losses are not caused by bad predictions. They are caused by positions that were too large for the prediction to be wrong, or by costs that quietly ate the edge. The calculators on this page — recurring investment, leveraged dollar-cost averaging, perpetual funding fees, and take-profit/stop-loss sizing — exist to put a number on those two things before money is committed. Here is the math each one runs and why it matters.
Leverage and the distance to liquidation
Leverage multiplies exposure without multiplying capital, which means it also shrinks the price move that ends the trade. Ignoring maintenance margin, a position's liquidation distance is roughly 100% divided by the leverage: 50% at 2×, 10% at 10×, 2% at 50×, 1% at 100×. Exchanges add a maintenance margin requirement that pulls the real threshold closer still. Bitcoin's average daily range over the past several years has been on the order of 3–4%, so a 25× position has a meaningful chance of being liquidated by ordinary noise within a day or two regardless of whether the directional call was right.
Funding: the cost of staying in a perpetual
Perpetual futures have no expiry, so exchanges keep their price tethered to spot with a funding rate — a periodic payment between longs and shorts, usually every eight hours. When the perpetual trades above spot, longs pay shorts; below spot, shorts pay longs. A rate of 0.01% per eight hours sounds negligible, but it is 0.03% a day, roughly 11% a year, and in euphoric markets rates of 0.1% per interval (over 100% annualized) are common. The funding calculator takes your position size, the exchange's posted rate, and a holding period, and shows the running cost — which for multi-week holds often dwarfs the 0.15–0.25% annual fee of a spot ETF.
Take-profit, stop-loss, and the risk-reward ratio
The TP/SL calculator takes position size, entry price, leverage, and direction, and lays out a ladder of take-profit and stop-loss prices with the dollar gain or loss at each level — so you can see, before entering, that a 2% move against a 20× position is the whole margin. Pair it with a fixed risk budget per trade (professional guidance is commonly 1–2% of the account) and a reward-to-risk target. At 2:1 a strategy can be wrong more often than it is right and still break even — only 34% winners are needed. Sizing from the stop, rather than picking a round-number position and hoping, is the single habit that separates survivors from the rest.
Averaging down: lowering cost, raising exposure
Buying more of a falling position lowers your average cost, and the leveraged DCA calculator shows exactly how far. It is worth remembering what it does not change: the asset still has to rise to the new average for you to break even, and you now have more capital at risk than before. Averaging down a conviction position in a spot asset with a fixed supply is a plan; averaging down a leveraged position approaching liquidation is a larger bet with the same thesis.
Recurring contributions
The recurring investment calculator compounds a fixed periodic contribution at an assumed annual return. Research on dollar-cost averaging versus lump-sum investing — summarized on the What If page — finds that lump sums usually win in rising markets while DCA narrows the range of outcomes in volatile ones. For most people contributing from income, the question is moot: DCA is simply what a paycheck lets you do. Use the historical return table under the tool to keep the assumed rate realistic.
Leverage and funding mechanics are described generically; each exchange publishes its own maintenance margin and funding schedule, which govern. Trading leveraged products can result in losses exceeding deposits. For informational purposes only — not financial advice.