Sizing and risk on thin coins: who buys your exit

On a thin coin, little money waits on the other side of a trade, so the value on your screen is not what a sale would pay. This page shows how much of a coin to buy, your size, and what selling it, your exit, would really pay. After reading it, you can set a size from the most you are willing to lose and check that you can pay to sell.

Most lessons named here sit further along the Crypto road, which opens one lesson after another.

How much can you lose?

Every plan holds two different numbers. The amount invested is units times the price you pay. The planned loss is units times the gap down to your exit price, plus fees. Your exit price is where you sell if you are wrong.

In Risk per trade, 40 units at 25.00 USD is 1,000 USD invested. With the exit price at 22.00 USD, each unit can lose 3.00 USD, so the planned loss is 120 USD before fees. You pay 1,000 USD, but the plan risks 120.

The number of units comes last. Position sizing starts from your risk budget, the most one trade may lose. Divide it by the risk per unit, the gap between your buy price and your exit price. A 90.00 USD budget over a 0.75 USD gap allows 120 units.

The budget is a ceiling, not a target. A size that does not fit shrinks, or there is no trade. The exit price never moves to make it fit.

An exit price is a trigger: it says when the sell goes out, not what price it gets. In A planned loss is not a cap on the loss, you buy 150 units at 20.00 USD and set the sell at 19.20, a planned loss of 120 USD. But the sell fills, or actually trades, at 18.90, so the loss is 165 USD.

Since prices can jump past a trigger, the lesson Separate invalidation from executable exit plans for a fill below the exit price. A bigger planned loss per coin means a smaller buy: in the lesson, the buy halves. And if you buy with your own money, the most you can lose is all you paid, because a price stops at zero.

All of this goes in a plan written before any order, as in Plan the trade first. The lesson Daily loss limits adds one more limit for the whole day, also written before you start.

Who buys when you sell?

A sale needs something taking the other side at that moment, the buyer side. In Who buys your exit, it is one pool: a pair of token reserves, one of each token, that a program swaps between by a formula. Nobody waits inside it with a bid, an offer to buy.

The lesson's practice coin, PIKE, trades only in one pool, holding 60 SOL and 4,000,000 PIKE. SOL is Solana's own coin, the one that pays its fees. Say you hold 2,000,000 PIKE, and the last trade was at 0.000015 SOL each. Your mark, units times the last price, is 30 SOL: a calculation, not cash.

The pool's rule, fees left out as in the lesson, is that its two reserves multiplied together never change: 60 times 4,000,000 is 240,000,000. Your sale adds 2,000,000 PIKE, so the pool holds 6,000,000. The SOL left must be 240,000,000 divided by 6,000,000: 40 SOL.

So 20 SOL comes out. That is your exit quote, what the sale would actually receive, and 10 SOL of the mark never arrives.

Easy to mix up: the mark and the exit quote. The mark prices each coin you hold at the last trade. The exit quote is what your whole sale would get, worked out in Size against the reserve.

The other numbers on PIKE's page are not buyers either, as Past activity is not a buyer shows. The day's 900 SOL of volume, the amount traded, was paid to earlier sellers. The 400 unique buyers of the last hour already bought. The 3,000 holders, the addresses holding PIKE, would draw on the same 60 SOL if they sold.

In Market cap is not a bid, the 300 SOL market cap is the price times every coin in circulation. It is not SOL in the pool.

Memecoins are attention markets: money goes where attention flows. But attention pays nothing until new buyers' SOL is actually in the pool. So in Buyers who have not arrived, a sale is worked out only on the pool as it is now.

How big can a buy be?

A buy pushes the price up as it fills. That move is price impact, the change your own order causes. Sizing against pool depth writes three limits before getting any prices:

• a budget: spend at most 60 SOL
• an impact cap: move the price at most 20 percent
• a size goal: at least 100,000 of the practice coin REED

Depth is how big a pool's reserves are next to your order. Those reserves are the liquidity you trade against. In a pool of 100 SOL, the cap allows at most 25 SOL, which buys 80,000 REED, short of the 100,000 goal. Bigger buys break the cap, so the plan says no trade.

In a pool three times deeper at the same price, 60 SOL buys 200,000 REED at about 17 percent impact. A price chart would show both pools the same.

A quote is the estimate an app shows before you send a trade. In Size the buy to depth, you get a quote for your whole buy, not a small test amount, because impact grows with size.

A quote is also a snapshot. In A declared impact limit, another buyer's trade runs first, and the same buy would pay 62.5 percent more per coin than the quote showed. Your protection is the minimum received, also called minimum output: the least your swap, a trade of one token for another, will accept.

The lesson Minimum output is a transaction condition shows that the swap checks it once, when it runs. Below it, the swap fails, and its network fee is still charged. It is not a stop-loss, an order to sell later if the price falls. Nor is it a safety check on the coin.

When a check on the coin fails, a smaller size is not the fix. If someone can still take or destroy your tokens, you can lose all you paid at any size, as Uncertainty is not permission to trade smaller shows. Spotting scams and low-quality tokens covers those checks.

What does a sale really pay?

In Selling into thin liquidity, you hold 60,000 of the practice coin WREN, bought for 3,000 USDC, a stablecoin designed to track the dollar. Your screen shows 6,000 USDC, plus 100 percent. The pool holds just 40,000 WREN and 4,000 USDC, so a sale pays far less:

• 10,000 WREN: 800 USDC
• 40,000 WREN: 2,000 USDC
• all 60,000 WREN: only 2,400 USDC

The full exit is a 600 USDC loss, not a 3,000 USDC gain.

Who sells first matters too. In Sellers share one buyer side, another holder sells 2,000,000 PIKE first, and your same sale gets 10 SOL instead of 20. You cannot see a seller like that coming.

Selling in pieces uses less of the pool at a time, so each sale has less price impact. It does not promise better prices. In Sell the position in pieces, three similar sales of the practice coin LARK return 4, then 3, then 1 SOL as the price falls.

Each sale also takes its share of the cost basis, the cash you spent to buy. Getting your cost back does not make the coins you keep free, as Partial exits and cost basis shows.

Say you pay 1,000 USDC for 2,000,000 of the practice coin FERN, then sell half for 1,000 USDC. Half your cost, 500, goes with the coins sold, so that sale made 500. The other 500 stays with the coins you kept, and they can still lose all of it.

A gain never sold can vanish. In Unrealized gains can reverse, a practice position climbs to four times its cost and ends the week below it, without a single sale. Its own sell rule, written before buying, had said to sell half earlier. Ignoring the rule, not the rule itself, cost the gain.

Why do you need SOL to sell?

A wallet full of tokens cannot pay its own fee. In Check the native fee reserve before exit, a wallet holds the practice coin BRIX, marked at about 900 USDC, and just 0.00004 SOL. The sale needs 0.002145 SOL: two small fees, plus SOL held as storage to open the wallet's first USDC account. That USDC arrives only at the end, so it cannot pay, and the sale cannot run.

Easy to mix up: what your tokens are worth and what your wallet can pay. Fees are paid in SOL, whatever the tokens are worth. The tokens keep their value, but the route to it is closed.

The lesson's answer is a fee reserve: SOL kept aside for fees and new accounts, with a minimum written in advance. You check it before you need to sell, because the pool keeps changing while you wait for SOL. As Fees, rent and SOL reserve puts it, you never have to count on selling a token just when a fee is due.