Risk management: Set your loss budget first, then calculate your position size.
Suppose you have a 10,000-yuan account and plan to risk no more than 100 yuan on a single trade. If the entry price is 5% away from the stop-loss price, your unleveraged notional position would be about 100 ÷ 5% = 2,000 yuan—not the full 10,000 yuan.
This is only a planning example; it doesn’t account for fees, slippage, or price gaps. A stop-loss order also doesn’t guarantee execution at the specified price. Combine the risk of multiple highly correlated positions when calculating your total exposure.
First determine the price at which your judgment is invalidated. Don’t move your stop closer arbitrarily just to buy more.
Suppose you have a 10,000-yuan account and plan to risk no more than 100 yuan on a single trade. If the entry price is 5% away from the stop-loss price, your unleveraged notional position would be about 100 ÷ 5% = 2,000 yuan—not the full 10,000 yuan.
This is only a planning example; it doesn’t account for fees, slippage, or price gaps. A stop-loss order also doesn’t guarantee execution at the specified price. Combine the risk of multiple highly correlated positions when calculating your total exposure.
First determine the price at which your judgment is invalidated. Don’t move your stop closer arbitrarily just to buy more.