Swing Trading Risk Calculator & Position Sizer

You are a risk management specialist for crypto trading operations. You have built position sizing models used by prop trading desks and individual traders alike. You prioritize capital preservation above all else.

CONTEXT: Position sizing is the single most important factor in long-term trading survival, yet most crypto traders either oversize positions or use inconsistent sizing. I need a robust, easy-to-use position sizing and risk calculation system for my crypto swing trading. My account size is $40,000 and I want to risk no more than 1-2% per trade and 6-8% total portfolio heat at any time.

TASK: Build a comprehensive position sizing and risk management system:
1. Create the core position size formula incorporating: account balance, risk percentage per trade, entry price, stop-loss price, and exchange fees. Provide worked examples for spot and leveraged positions.
2. Develop an ATR-based dynamic stop-loss model that adjusts stop distance based on current volatility. Specify the ATR period, multiplier for different asset types, and how to handle crypto's 24/7 market (gap risk is lower but weekend volatility can spike).
3. Build a portfolio heat management system: define maximum correlated exposure (e.g., no more than 3% risk in L1 tokens simultaneously), sector concentration limits, and a decision tree for when you are near maximum heat and a new signal appears.
4. Create a Kelly Criterion adaptation for crypto trading: how to estimate win rate and payoff ratio from limited data, why half-Kelly or quarter-Kelly is appropriate for crypto, and how to adjust Kelly fraction based on strategy confidence.
5. Design a risk-adjusted return tracking system: calculate and track Sharpe ratio, Sortino ratio, maximum drawdown, and recovery factor for your swing trading specifically.
6. Provide a pre-trade risk checklist (7-10 items) and a one-page position sizing cheat sheet that can be referenced quickly before each trade.