Count market ideas, not only open tickets.
A BTC long, an ETH long and a SOL long may have separate entries and stops while still expressing one broad risk-on view. Counting three order tickets can make the exposure look distributed even when the same market move could pressure all three positions at once. This is concentration risk at the level of the trading idea.
That does not mean the three assets always move together or by the same percentage. Dependence can strengthen, weaken or briefly reverse. A combined-stop scenario is therefore a planning tool, not a forecast of correlation or a claim that every stop will be reached simultaneously.
Add the planned cash loss across related positions.
Suppose a simulated 100,000 USD account plans 0.25% risk on each of three trades. The planned loss is 250 USD per trade. If all three stops are reached, the combined planned loss is 750 USD, or 0.75% of the starting balance, before fees, slippage or losses on other open positions.
The arithmetic is simple: add the forward loss from the same account snapshot once. If current equity already includes an unrealised loss, add only the additional downside from current price to the planned exit. Re-adding the full loss from entry would count part of the drawdown twice.
Adding three planned stop losses asks what could happen if all three exits are reached. It does not state that BTC, ETH and SOL always move together.
Treat dependence as a changing condition.
Historical correlation is a description of a selected sample, timeframe and return interval. It can change when volatility rises, liquidity thins or a market-wide event affects several assets. A single correlation number should not be used as permission to stack positions until the theoretical benefit is exhausted.
Use a conservative scenario that fits the decision. For closely related directional trades, assuming that all planned stops can be reached is transparent and easy to audit. Other scenarios may be useful, but a more complex model does not remove execution risk or guarantee diversification.
Set an idea-level cap before adding the next trade.
Write a maximum planned loss for one market idea and compare every new related position with that cap. The review should include pending orders, remaining downside on existing positions, estimated costs and the tighter of the current daily and maximum drawdown boundaries.
If the new position would take combined risk above the plan, reduce size, remove another exposure or skip the trade. Recalculate after fills, partial exits, stop changes and daily resets. A result inside the scenario is not a guarantee that actual execution will remain inside the account limits.
- Group the idea.Identify positions that depend on the same directional or market-wide move.
- Add forward losses.Use remaining downside from the current equity snapshot plus estimated costs.
- Compare the boundary.Keep the combined idea inside the written personal and account limits.
Measure combined exposure before adding
FAQ
Does holding several crypto assets guarantee diversification?
No. Different symbols can still share a market driver, and their relationship can change over time.
Should I multiply risk by a historical correlation coefficient?
Not automatically. A coefficient depends on the selected sample and can create false precision. A combined-stop scenario is often easier to understand and audit.
What if current equity already includes an open loss?
Add only the further loss from the current price to the planned exit, plus future costs that are not yet reflected in equity.
Does this model predict that every stop will hit?
No. It measures one selected loss scenario; it does not estimate its probability.