📉💰 The biggest mistake I made, costing me $5,400, was not knowing my *exact* dollar risk before entering a trade. Don't be like me! This calculation is non-negotiable.
Here’s the simple formula: Risk in $ = (Entry Price - Stop Loss Price) * Position Size (in asset units).
Let's use our example: You have a $1000 account and want to go long BTC at $60,000. Forget the 10x leverage for a second – that’s just buying power. First, *you* decide how much you're willing to lose. Say you'll risk 2.5% of your account, which is $25.
You also identify your stop-loss level, perhaps at $59,500. This means each BTC unit movement costs you $500.
Now, to risk only $25:
Position Size = Desired Dollar Risk / (Entry Price - Stop Loss Price)
Position Size = $25 / ($60,000 - $59,500)
Position Size = $25 /...
Here’s the simple formula: Risk in $ = (Entry Price - Stop Loss Price) * Position Size (in asset units).
Let's use our example: You have a $1000 account and want to go long BTC at $60,000. Forget the 10x leverage for a second – that’s just buying power. First, *you* decide how much you're willing to lose. Say you'll risk 2.5% of your account, which is $25.
You also identify your stop-loss level, perhaps at $59,500. This means each BTC unit movement costs you $500.
Now, to risk only $25:
Position Size = Desired Dollar Risk / (Entry Price - Stop Loss Price)
Position Size = $25 / ($60,000 - $59,500)
Position Size = $25 /...