A 9% green candle doesn't mean bigger size. It means smaller.
$ENA closed Wednesday up 9.1%, from 0.1960 to 0.2138. It's 0.2133 this morning.
Say you have 1,000 USDT and risk 1% per trade. That's 10 USDT you can lose.
Buy ENA here with a stop under Wednesday's low:
- Entry 0.2133, stop 0.1952
- Stop distance: 8.5%
- Size: 10 / 8.5% = about 118 USDT
Same idea on $BTC with the same 10 USDT:
- Entry 84,335, stop under Wednesday's low at 82,635
- Stop distance: 2.0%
- Size: 10 / 2.0% = about 496 USDT
Same risk. The ENA position is less than a quarter of the BTC one.
Most people do the opposite. A big candle feels like proof, so they size up. Then the wide stop either gets hit for 4x the planned loss, or they move it closer and get shaken out on normal noise.
The stop sets the size. The candle doesn't.
When a coin runs 9% in a day, do you cut size for the wider stop, or skip the trade?
$ENA closed Wednesday up 9.1%, from 0.1960 to 0.2138. It's 0.2133 this morning.
Say you have 1,000 USDT and risk 1% per trade. That's 10 USDT you can lose.
Buy ENA here with a stop under Wednesday's low:
- Entry 0.2133, stop 0.1952
- Stop distance: 8.5%
- Size: 10 / 8.5% = about 118 USDT
Same idea on $BTC with the same 10 USDT:
- Entry 84,335, stop under Wednesday's low at 82,635
- Stop distance: 2.0%
- Size: 10 / 2.0% = about 496 USDT
Same risk. The ENA position is less than a quarter of the BTC one.
Most people do the opposite. A big candle feels like proof, so they size up. Then the wide stop either gets hit for 4x the planned loss, or they move it closer and get shaken out on normal noise.
The stop sets the size. The candle doesn't.
When a coin runs 9% in a day, do you cut size for the wider stop, or skip the trade?