> ## Documentation Index
> Fetch the complete documentation index at: https://uncoded.ch/docs/llms.txt
> Use this file to discover all available pages before exploring further.

# Capital Allocation — Sizing Decisions

> How to allocate capital across pairs, modes, and venues. The sizing decisions that determine your overall risk exposure.

<Info>
  **Capital allocation is about how much exposure each part of your operation gets.** Per-pair, per-mode, per-venue sizing decisions accumulate into your overall risk profile. Allocate well and a single bad pair is absorbable; allocate poorly and one bad pair takes you down.
</Info>

## The allocation hierarchy

<Steps>
  <Step title="Total exchange balance">
    The sum of all your assets on a given exchange. This is the universe of possible deployment.
  </Step>

  <Step title="Trading capital vs reserve">
    Roughly `50%` deployed to active modes; `50%` reserve. The reserve is not deployed to any mode — it's the buffer.
  </Step>

  <Step title="Per-mode capital">
    Of the trading capital, divide across the modes you're running. If you're running BasicMode and FullBullMarket simultaneously, decide the split (e.g., `60/40`).
  </Step>

  <Step title="Per-pair capital">
    Within each mode, allocate per pair. For BasicMode running 3 pairs (`BTCUSDT`, `ETHUSDT`, `SOLUSDT`), decide per-pair sizing (e.g., `40/30/30`).
  </Step>

  <Step title="Cross-venue allocation">
    If you run multiple venues, decide the venue-level split (typically `70/30` for primary/secondary).
  </Step>
</Steps>

## The 25% rule

<Warning>
  **No single pair should hold more than `25%` of your trading capital.** Concentration risk is real — single-symbol catastrophes happen, even on majors.

  Why `25%`:

  * A `-50%` drawdown on a single pair at `25%` allocation = `-12.5%` total drawdown. Painful but recoverable.
  * A `-50%` drawdown on a single pair at `100%` allocation = catastrophic.

  This rule applies even to BTCUSDT, the safest crypto. Even Bitcoin has had `-50%+` drawdowns. Don't bet the farm on any single symbol.

  For 3-pair operators: `40/30/30` or `35/35/30` are typical splits. For 4-pair operators: `25/25/25/25` is the simple equal-weight. For 5+ pair operators: capital fragmentation starts to matter; check that per-split sizing still clears min-notional.
</Warning>

## Sizing examples

<AccordionGroup>
  <Accordion title="The starter — $20,000 trading capital" icon="seedling">
    Total exchange balance: `$30,000`.

    * Trading capital: `$20,000`
    * Reserve: `$10,000`

    Mode: BasicMode (Mode 4) on `BTCUSDT` only.

    Allocation: 100% of trading capital to `BTCUSDT`. Single pair, simplest setup.

    Note: this violates the `25%` rule (because it's 100% on one pair). Acceptable as a starter for the first 1–2 months because:

    * You're learning the bot.
    * You're not yet running multiple pairs.
    * Your reserve still buffers the catastrophic case (`50%` of total).

    **Plan to add a second pair after month 1** to start applying the `25%` rule.
  </Accordion>

  <Accordion title="The standard — $20,000 across 3 pairs" icon="boxes-stacked">
    Total: `$30,000`. Trading: `$20,000`. Reserve: `$10,000`.

    Mode: BasicMode on `BTCUSDT`, `ETHUSDT`, `SOLUSDT`.

    Allocation: `$8,000 / $7,000 / $5,000` (40/35/25).

    No pair exceeds `25%` of trading capital ($5,000 = 25% of $20,000 — at the boundary).

    For wider safety: `$7,000 / $7,000 / $6,000` (35/35/30) — none exceeds 35%.
  </Accordion>

  <Accordion title="The dual-mode operator — $30,000 across modes" icon="puzzle-piece">
    Total: `$45,000`. Trading: `$30,000`. Reserve: `$15,000`.

    Modes: BasicMode (Mode 4) on `BTCUSDT`, `ETHUSDT`. FullBullMarket (Mode 1) on `SOLUSDT`.

    Allocation:

    * BasicMode: `$20,000` (`$10,000` BTC, `$10,000` ETH)
    * FullBullMarket: `$10,000` (SOL only)

    No pair exceeds `33%`. Two modes test different regimes.
  </Accordion>

  <Accordion title="The dual-venue operator — $40,000 across Binance + Bybit" icon="globe">
    Binance: `$25,000` total (`$17,000` trading, `$8,000` reserve). Bybit: `$20,000` total (`$13,000` trading, `$7,000` reserve).

    Binance: BasicMode on `BTCUSDT` (`$10,000`), `ETHUSDT` (`$7,000`). Bybit: BasicMode on `XRPUSDT` (`$8,000`), `LINKUSDT` (`$5,000`).

    Different symbols per venue (no double-exposure). Both venues maintain their own reserves.
  </Accordion>
</AccordionGroup>

## Capital sizing per mode

Each mode has its own capital sweet spot:

| Mode                            | Recommended capital | Per-pair max (25% rule)   |
| ------------------------------- | ------------------- | ------------------------- |
| BasicMode (Mode 4)              | `~$20,000`          | `~$5,000`                 |
| FullBullMarket (Mode 1)         | `~$20,000`          | `~$5,000`                 |
| LongTimeLongMoreProfit (Mode 2) | `~$20,000`          | `~$5,000`                 |
| LongTimeLong (Mode 3)           | `~$25,000`          | `~$6,250`                 |
| LowMoney (Mode 5)               | `~$3,000`           | `~$750`                   |
| MinimalMoney (Mode 6)           | `~$1,500`           | `~$375`                   |
| Tsl2Sell (Mode 7)               | `~$10,000`          | `~$2,500`                 |
| MarketMaker (Mode 1001)         | `$20,000+`          | n/a (single pair typical) |
| MarketMakerMinimal (Mode 1002)  | `~$5,000`           | n/a (single pair typical) |

Note: at lower capital (LowMoney, MinimalMoney), the `25%` per-pair rule produces very small per-pair allocations. If single-pair allocation falls below practical min-notional consideration, consolidate to fewer pairs at this capital tier.

## Common allocation mistakes

<AccordionGroup>
  <Accordion title="❌ All-in on one pair" icon="ban">
    Single-symbol allocation. Concentration risk fully realized.

    **Fix**: split across at least 2-3 symbols once your capital permits. The `25%` rule is your friend.
  </Accordion>

  <Accordion title="❌ Equal-weighting across uncorrelated symbols you don't understand" icon="ban">
    Allocating evenly to 8 random altcoins because "diversification."

    **Reality**: most altcoins move together with BTC. You're not actually diversified. And each individual altcoin has higher tail risk than majors.

    **Fix**: 3–5 well-understood symbols, not 8 random ones.
  </Accordion>

  <Accordion title="❌ Scaling up after a good month" icon="ban">
    `+10%` realized in month 1 → "I'll deploy `+50%` more capital next month."

    **Reality**: a good month doesn't predict the next month. Scaling up after good performance is recency bias.

    **Fix**: scale capital deliberately, with rules ("after 3 consecutive profitable months, scale `+25%`"). Not impulsively.
  </Accordion>

  <Accordion title="❌ Adding capital to a drawdown" icon="ban">
    Position is `-15%` underwater. "I'll add more to lower the average entry."

    **Reality**: this is averaging-down, which can deepen the loss. The reserve is for emergencies, not for "saving" bad positions.

    **Fix**: stop-loss is your tool for managing bad positions. Don't reach for averaging-down as a default.
  </Accordion>

  <Accordion title="❌ Different reserves per venue without thinking" icon="ban">
    Binance: `60%` reserve. Bybit: `30%` reserve. No specific reason.

    **Reality**: inconsistent reserve discipline across venues makes risk hard to reason about.

    **Fix**: same `~50%` reserve target on every venue. If you have specific venue-trust reasons to be more conservative on one, document the reasoning.
  </Accordion>

  <Accordion title="❌ No reserve at all" icon="ban">
    100% of exchange balance deployed.

    **Reality**: any drawdown affects full exposure. No buffer for opportunities or stress.

    **Fix**: 50% reserve. Yes, your "working" capital is smaller. The resilience is worth it.
  </Accordion>
</AccordionGroup>

## When to scale capital up

<AccordionGroup>
  <Accordion title="Wait at least 1 month after starting" icon="hourglass">
    The first month is paid education. Mode dynamics need a month to reveal themselves. Don't scale capital based on the first 4 weeks.
  </Accordion>

  <Accordion title="Scale `25%` at a time, not `2x`" icon="ruler-combined">
    `$20,000 → $25,000` (`+25%`) is reasonable. `$20,000 → $40,000` (`2x`) is aggressive without much added evidence.

    Compounding scaling lets you assess the dynamics at each new size.
  </Accordion>

  <Accordion title="After 3 consecutive non-negative months" icon="calendar">
    A simple rule: 3 months of break-even-or-better realized P\&L. Then scale by `25%`.

    This is conservative; aggressive operators scale faster. But conservative scaling means you're never substantially overcommitted to a strategy that's about to mean-revert.
  </Accordion>

  <Accordion title="Match scaling to confidence growth" icon="user-check">
    The right time to scale capital is when you genuinely understand what the bot does and why it does it. Not when you're hopeful it'll work; when you've seen it work through enough conditions to have informed confidence.
  </Accordion>
</AccordionGroup>

## When to scale capital DOWN

<AccordionGroup>
  <Accordion title="After unexplainable losses" icon="circle-exclamation">
    `-15%` realized in a month, you don't have a clean explanation for why. Scale down `25%` while you investigate.

    Better to operate smaller while learning than to keep paying tuition you don't understand.
  </Accordion>

  <Accordion title="Personal stress / external concerns" icon="user">
    Family issues, job changes, health. If your operational attention is impaired, smaller capital matches the lower attention.
  </Accordion>

  <Accordion title="Regime mismatch confirmed by backtest" icon="flask">
    Backtest shows your current mode underperforms in the current regime. Either change modes or scale down. Don't keep paying for a regime mismatch.
  </Accordion>

  <Accordion title="Need liquidity" icon="hand-holding-dollar">
    Life happens. If you need capital out of crypto, withdraw from reserve first; if more is needed, scale active modes down to free capital. Don't withdraw from active positions mid-trade.
  </Accordion>
</AccordionGroup>

## Best practices

<Tip>
  * ✅ **Reserve `~50%` of total exchange balance** as the universal rule.
  * ✅ **No single pair > `25%` of trading capital**.
  * ✅ **3–8 active pairs maximum** — beyond this, attention fragments.
  * ✅ **Different symbols per venue** — avoid double-exposure to the same pair across multiple venues.
  * ✅ **Scale capital in `25%` increments**, not `2x` jumps.
  * ✅ **Wait 1 month before any scaling decision** — first month is education.
  * ✅ **Document your allocation in an operator runbook** — easier to audit than reconstruct.
  * ✅ **Cross-check capital allocation weekly** during your Dashboard review.
  * ✅ **Don't reach for averaging-down** as a default response to drawdowns.
  * ✅ **Match capital sizing to mode recommendations** — running BasicMode at `$3,000` is mode-mismatch.
  * ✅ **Have a documented scale-up trigger** ("3 non-negative months" or similar) to avoid impulse scaling.
  * ✅ **Don't skim from the reserve** — once committed to "this is reserve," treat it as untouchable except for emergencies.
</Tip>

## What's next

<CardGroup cols={2}>
  <Card title="Reserves" icon="vault" href="/risk-management/reserves">
    The 50% rule in detail — why and how.
  </Card>

  <Card title="Risk Overview" icon="shield" href="/risk-management/overview">
    The full risk framework.
  </Card>

  <Card title="Sub-accounts" icon="layer-group" href="/risk-management/sub-accounts">
    Strategy isolation for experimentation.
  </Card>

  <Card title="Modes" icon="boxes-stacked" href="/strategies/modes/overview">
    Mode-specific capital recommendations.
  </Card>
</CardGroup>