📐 HOW TO CALCULATE POSITION SIZE: THE SAFETY FORMULA
We already know about the 1–2% risk rule and the R:R ratio. But how do you correctly calculate how much of an asset to buy so you don’t exceed your loss limit?
Let’s break down a simple mathematical algorithm.
🔢 1. The calculation algorithm in 3 steps:
1. Determine your risk in monetary terms: If your deposit is $1000 and your risk per trade is 1%, that’s exactly $10.
2. Find the distance to your stop (%): Use technical analysis to set a Stop-Loss (for example, 5% away from your entry point).
3. Calculate your position: To lose 10$ with a 5% price move, your total position size should be 200$ (200$ × 5% = 10$).
⚠️ 2. What about leverage?
Remember the key point: leverage doesn’t increase your monetary risk if you set your Stop-Loss correctly. Leverage only allows you to trade a larger volume using collateral, but the loss when your stop is triggered should always remain within your planned risk limit (1–2%).
💡 The golden rule:
Never open a position “by eye.” Mathematics and precise calculations are what distinguish a professional trader from a casino gambler.
#Binance #ризикменеджмент #трейдинг #крипта #навчання
We already know about the 1–2% risk rule and the R:R ratio. But how do you correctly calculate how much of an asset to buy so you don’t exceed your loss limit?
Let’s break down a simple mathematical algorithm.
🔢 1. The calculation algorithm in 3 steps:
1. Determine your risk in monetary terms: If your deposit is $1000 and your risk per trade is 1%, that’s exactly $10.
2. Find the distance to your stop (%): Use technical analysis to set a Stop-Loss (for example, 5% away from your entry point).
3. Calculate your position: To lose 10$ with a 5% price move, your total position size should be 200$ (200$ × 5% = 10$).
⚠️ 2. What about leverage?
Remember the key point: leverage doesn’t increase your monetary risk if you set your Stop-Loss correctly. Leverage only allows you to trade a larger volume using collateral, but the loss when your stop is triggered should always remain within your planned risk limit (1–2%).
💡 The golden rule:
Never open a position “by eye.” Mathematics and precise calculations are what distinguish a professional trader from a casino gambler.
#Binance #ризикменеджмент #трейдинг #крипта #навчання