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Positionsizing

Position Sizing 101: How Not to Blow Up Your Account OvernightWelcome to the trading equivalent of wearing a seatbelt. Not really exciting but entirely recommended for its lifesaving properties. When the market crashes into your stop-loss at 3:47 a.m., you’ll wish you’d taken this lesson seriously. Let’s talk position sizing — the least flashy but most essential tool in your trading kit. This is your friendly reminder that no matter how perfect your chart setup looks, if you’re risking 50% of your capital on a single trade, you’re not trading. You’re gambling. And also — if you lose 50% of your account, you have to gain 100% to get even. ✋ “Sir, This Isn’t a Casino” Let’s start with a story. New trader. Fresh demo account turned real. He sees a clean breakout. He YOLOs half his account into Tesla ( TSLA ). "This is it," he thinks, "the trade that changes everything." News flash: it did change everything — his $10,000 account turned into $2,147 in 48 hours. The lesson? Position sizing isn’t just about managing capital. It’s about managing ego. Because the market doesn’t care how convinced you are. 🌊 Risk of Ruin: The More You Know There’s a lovely concept in trading called “risk of ruin.” Sounds dramatic — and it is. It refers to the likelihood of your account going to zero if you keep trading the way you do. If you risk 10% of your account on every trade, you only need to be wrong a few times in a row to go from “pro trader” to “Hey, ChatGPT, is trading a scam?” Risking 1–2% per trade, however? Now we’re talking sustainability. Now you can be wrong ten times in a row and still live to click another chart. 🎯 The Math That Saves You Let’s illustrate the equation: Position size = Account size × % risk / (Entry – Stop Loss) Example: $10,000 account, risking 1%, with a 50-point stop loss on a futures trade. $10,000 × 0.01 = $100 $100 / 50 = 2 contracts That’s it. No Fibonacci razzle-dazzle or astrology needed. Just basic arithmetic and a willingness to not be a hero. 🤔 The Myth of Conviction Every trader has a moment where they say: “I know this is going to work.” Spoiler alert: You don’t. And the moment you convince yourself otherwise, you start increasing position size based on emotion, not logic. That’s where accounts go to die. Even the greats keep it tight. Paul Tudor Jones, the legend himself, once said: “Don't focus on making money; focus on protecting what you have.” Translation: size down, cowboy. 🔔 Position Size ≠ Trade Size A common mistake: confusing position size with trade size. Trade size is how big your order is. Position size is how much of your total capital is being risked. You could be trading 10 lots — but if your stop loss is tight, your position size might still be conservative. So yes, trade big. But only if your risk is small. You’ll do better at this once you figure out how asymmetric risk reward works. 🌦️ Losses Happen. Don’t Let Them Compound Let’s say you lose 5% on a trade. No big deal, right? Until you try to “make it back” by doubling down on the next one. And then again. And suddenly, you’re caught in a death spiral of revenge trading . This is not theoretical. It’s Tuesday morning for many traders. Proper position sizing cushions the blow. It turns what would be a catastrophe into a lesson — maybe even a mildly annoying Tuesday. 🌳 It’s Not Just About Risk — It’s About Freedom Smart sizing gives you flexibility (and a good night’s sleep). Want to hold through some noise? You can. Want to scale in? You’re allowed. Want to sleep at night without hugging your laptop? Welcome to emotional freedom. Jesse Livermore, arguably the most successful trader of all time, said it best: “If you can’t sleep at night because of your stock market position, then you have gone too far. If this is the case, then sell your position down to the sleeping level.” ⛳ What the Pros Actually Do Here’s a dirty little secret: pros rarely go all-in without handling the risk part first (that is, calibrating the position size). If they’re not allocating small portions of capital across uncorrelated trades, they’ll go big on a trade that has an insanely-well controlled risk level. That way, if the trade turns against them, they’ll only lose what they can afford to lose and stay in the game. Another great one, Stanley Druckenmiller, who operated one of the best-returning hedge funds (now a family office) said: “I believe the best way to manage risk is to be bullish when you have a compelling risk/reward.” 🏖️ The Summer of FOMO Let’s address the seasonal vibes. Summer’s here. Volume’s thin. Liquidity’s weird. Breakouts don’t follow through. Every false move looks like the real deal until it isn’t. And every poolside Instagram story from your trader friend makes you want to hit that buy button harder. This is where position sizing saves you from yourself. Small trades, wide stops, chill mindset. Or big trades, tight stops, a bit of excitement in your day. No matter what you choose, make sure to get your dose of daily news every morning, keep your eye on the economic calendar , and stay sharp on any upcoming earnings reports (GameStop NYSE:GME is right around the corner, delivering Tuesday). ☝️ Final Thoughts: The Indicator You Control In a world of lagging indicators, misleading news headlines, and “experts” selling you dreams, position sizing is one of the few things you have total control over. And that makes it powerful. So next time you feel the rush — the urge to go big — take a breath. Remember the math. Remember the odds. And remember: the fastest way to blow up isn’t a bad trade — it’s a good trade sized wrong. Off to you: How are you handling your trading positions? Are you the type to go all-in and then think about the downside? Or you’re the one to think about the risk first and then the reward? Let us know in the comments!
SP:SPXEducation
by TradingView
27
Optimal Position Size May Reduce RisksOptimal Position Size May Reduce Risks Position sizing in trading is a crucial yet often overlooked aspect of risk management. It's the art of determining how much capital to allocate to each trade, balancing the potential for effective trading with the need to protect your investment. This article delves into the principles of position sizing, offering insights into how traders may optimise their strategies to potentially reduce risk and maximise their trading opportunities. What Is Position Sizing in Trading? Position sizing, or trade sizing, is a fundamental concept in trading that determines how much capital is allocated to a specific trade. This process isn't about maximising profits; it's crucial for managing risk. The right position size may minimise the potential loss on each trade relative to the overall capital, potentially ensuring that a single loss doesn't significantly impact the trader's account. In essence, determining trade sizes is a balancing act. It involves calculating the appropriate amount to invest based on various factors like account size, risk tolerance, and market conditions. This calculated approach contrasts sharply with random or emotional decision-making, where the size of a trade might be based on a hunch or a desire to recoup losses. The Role of Leverage in Position Sizing Leverage in trading is comparable to a double-edged sword. It allows traders to control larger positions with a smaller amount of capital, effectively amplifying both potential returns and risks. When a trader employs leverage, they borrow capital, increasing their trading power. However, when combined with strict position sizing and stop-loss placement, leverage serves a different role. It doesn't necessarily increase the risk but rather reallocates capital more efficiently. For example, if someone uses leverage to open a position, they're required to commit only a fraction of the trade's total value, known as the margin. If they’re risking 1% of their account balance on a single trade and never move their stop loss, the trader’s loss is limited to this 1%, regardless of how much leverage they use. The only difference is that lower leverage uses more capital for margin and vice versa. Key Factors Influencing Position Size When it comes to determining the right position size in trading, two key factors come into play, both crucial for tailoring risk management to individual needs: - Risk Tolerance: Every person has a unique comfort level with risk. Some might be inclined to use a larger proportion of their account balance on a given trade, accepting higher potential losses for greater potential gains, while others may prefer a more conservative stance, prioritising capital preservation. - Market Volatility: The level of volatility in the market significantly influences position sizing. In highly volatile markets, where price swings are more pronounced, reducing position size can be a prudent strategy to potentially limit exposure to sudden and severe market movements. Calculating Optimal Position Sizes Understanding how to calculate position sizes is a cornerstone of effective trading. The process involves several steps that balance risk management with the potential for returns. Here’s a detailed breakdown: - Determining Risk Tolerance Per Trade: First, decide what percentage of your trading capital you are willing to risk on a single trade. A common guideline is the 1% rule, meaning if you have $10,000, you will lose no more than $100 per trade. - Setting a Stop-Loss Order: This is a predetermined point where a losing trade will be closed to prevent further losses. The stop-loss is set based on market analysis and does not exceed the risk tolerance. - Calculating the Risk per Share/Unit: Subtract the stop-loss level from the entry price. For example, $50 (entry price) in the stock market - $45 (stop-loss) equals a $5 risk per share. - Determining Position Size: Divide the dollar amount you’re willing to risk by the risk per share/unit. Using the $100 risk on a $10,000 account, divide this by the $5 risk per share: $100/$5 = 20 shares. Thus, you should buy 20 shares to stay within your 1% limit. As a result, if your stop-loss is triggered, you’d only lose 1% of your total capital. Position Sizing Strategies In trading, there are two commonly used position-sizing strategies: - Fixed Percentage Model: This strategy involves risking a fixed percentage of the total trading capital on each trade. For example, one might consistently risk 2% of their capital per trade. This method automatically adjusts the dollar amount at risk based on the current account size, potentially ensuring that losses are proportionate to the account's value. - Dollar Amount Risk Model: Here, traders potentially lose a set dollar amount on every trade, regardless of the account size. For instance, a trader may decide to risk $500 on each trade. This model is simpler and easier to manage, especially for traders with less experience, but doesn't adjust for changes in the total account value, which could be a drawback as the account grows or shrinks. The Impact of Position Sizing on Trading Performance Optimal position sizing is risk-reducing and plays a critical role in a trader's overall performance. By allocating the right amount of capital to each trade, they potentially can manage potential losses more effectively, preserving their trading capital over the long term. This approach is believed to help traders be sure that a series of losing trades does not significantly deplete the account, allowing them to remain in the market. Moreover, optimal position sizing may contribute to emotional stability. Traders are less likely to experience extreme stress or make impulsive decisions when they know their risk is controlled and losses are within acceptable limits. This psychological benefit cannot be overstated, as a calm and focused mindset is essential for making rational trading decisions. The Bottom Line In essence, mastering position sizing is key to balancing potential gains with prudent risk management. Remember, optimal position sizing is about protecting your capital while maximising opportunities and is a valuable tool in long-term, sustainable trading. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
by FXOpen
5
Position Sizing StrategiesPosition sizing is one of the most important aspects in risk management for traders. Proper position sizing helps manage the risk effectively by maximizing profits and limiting the losses. In this publication, we will explore popular position sizing strategies and how to implement them in pinescript strategies 🎲 Importance of Position Sizing in Trading Let's take an example to demonstrate the importance of position sizing. You have a very good strategy that gives you win on 70% of the times with risk reward of 1:1. If you start trading with this strategy with all your funds tied into a single trade, you have the risk of losing most of your fund in the first few trades and even with 70% win rate at later point of time, you may not be able to recoup the losses. In such scenarios, intelligent position sizing based on the events will help minimize the loss. In this tutorial, let us discuss some of those methods along with appropriate scenarios where that can be used. 🎲 Position Sizing Strategies Available in Tradingview Strategy Implementation 🎯 Fixed dollar amount position sizing In this method, trader allocate a fixed value of X per trade. Though this method is simple, there are few drawbacks Does not account for varying equity based on the trade outcomes Does not account for varying risk based on the volatility of the instrument 🎯 Fixed Percentage of Equity In this method, percent of equity is used as position size for every trade. This method is also simple and slightly better than the Fixed dollar amount position sizing. However, there is still a risk of not accounting for volatility of the instrument for position sizing. In tradingview strategies, you can find the position sizing settings in the properties section. In both cases, Pinescript code for the entry does not need to specify quantity explicitly, as they will be taken care by the framework. if(longEntry) strategy.entry('long', strategy.long) if(shortEntry) strategy.entry('short', strategy.short) 🎲 Advanced Position Sizing Strategies There are not directly supported in Tradingview/Pinescript - however, they can be programmed. 🎯 Fixed Fractional Method The Fixed Fractional Method is similar to the fixed percentage of equity method/fixed dollar amount positioning method, but it takes into account the amount of risk on each trade and calculate the position size on that basis. This method calculates position size based on the trader’s risk tolerance, factoring in stop-loss levels and account equity. Due to this, the trader can use any instrument and any timeframe with any volatility with fixed risk position. This means, the quantity of overall trade may vary, but the risk will remain constant. Example. Let's say you have 1000 USD with you and you want to trade BTCUSD with entry price of 100000 and stop price of 80000 and target of 120000. You want to risk only 5% of your capital for this trade. Calculation will be done as follows. Risk per trade = 5% of 1000 = 50 USD Risk per quantity = (entry price - stop price) = 20000 So, the quantity to be used for this trade is calculated by RiskQty = Risk Amount / Risk Per Quantity = 50 / 20000 = 0.0025 BTC To implement the similar logic in Pinescript strategy by using the strategy order quantity as risk, we can use the following code riskAmount = strategy.default_entry_qty(entryPrice)*entryPrice riskPerQty = math.abs(entryPrice-stopPrice) riskQty = riskAmount/riskPerQty With this, entry and exit conditions can be updated to as follows if(longEntry) strategy.entry('long', strategy.long, riskQty, stop=entryPrice) strategy.exit('ExitLong', 'long', stop=stopPrice, limit=targetPrice) if(shortEntry) strategy.entry('short', strategy.short, riskQty, stop=entryPrice) strategy.exit('ExitShort', 'short', stop=stopPrice, limit=targetPrice) 🎯 Kelly Criterion Method The Kelly Criterion is a mathematical formula used to determine the optimal position size that maximizes the long-term growth of capital, considering both the probability of winning and the payoff ratio (risk-reward). It’s a more sophisticated method that balances risk and reward in an optimal way. Kelly Criterion method needs a consistent data on the expected win ratio. As and when the win ratio changes, the position sizing will adjust automatically. Formula is as follows f = W - L/R f: Fraction of your capital to bet. W : Win Ratio L : Loss Ratio (1-W) R : Risk Reward for the trade Let's say, you have a strategy that provides 60% win ratio with risk reward of 1.5, then the calculation of position size in terms of percent will be as follows f = 0.6 - 0.4/1.5 = 0.33 Pinescript equivalent of this calculation will be riskReward = 2 factor = 0.1 winPercent = strategy.wintrades/(strategy.wintrades+strategy.losstrades) kkPercent = winPercent - (1-winPercent)/riskReward tradeAmount = strategy.equity * kkPercent * factor tradeQty = tradeAmount/entryPrice 🎲 High Risk Position Sizing Strategies These strategies are considered very high risk and high reward. These are also the strategies that need higher win ratio in order to work effectively. 🎯Martingale Strategy The Martingale method is a progressive betting strategy where the position size is doubled after every loss. The goal is to recover all previous losses with a single win. The basic idea is that after a loss, you double the size of the next trade to make back the lost money (and make a profit equal to the original bet size). How it Works: If you lose a trade, you increase your position size on the next trade. You keep doubling the position size until you win. Once you win, you return to the original position size and start the process again. To implement martingale in Pine strategy, we would need to calculate the last consecutive losses before placing the trade. It can be done via following code. var consecutiveLosses = 0 if(ta.change(strategy.closedtrades) > 0) lastProfit = strategy.closedtrades.profit(strategy.closedtrades-1) consecutiveLosses := lastProfit > 0? 0 : consecutiveLosses + 1 Quantity can be calculated using the number of consecutive losses qtyMultiplier = math.pow(2, consecutiveLosses) baseQty = 1 tradeQty = baseQty * qtyMultiplier 🎯Paroli System (also known as the Reverse Martingale) The Paroli System is similar to the Anti-Martingale strategy but with more defined limits on how much you increase your position after each win. It's a progressive betting system where you increase your position after a win, but once you've won a set number of times, you reset to the original bet size. How it Works: Start with an initial bet. After each win, increase your bet by a predetermined amount (often doubling it). After a set number of wins (e.g., 3 wins in a row), reset to the original position size. To implement inverse martingale or Paroli system through pinescript, we need to first calculate consecutive wins. var consecutiveWins = 0 var maxLimit = 3 if(ta.change(strategy.closedtrades) > 0) lastProfit = strategy.closedtrades.profit(strategy.closedtrades-1) consecutiveWins := lastProfit > 0? consecutiveWins + 1 : 0 if(consecutiveWins >= maxLimit) consecutiveWins := 0 The quantity is then calculated using a similar formula as that of Martingale, but using consecutiveWins qtyMultiplier = math.pow(2, consecutiveWins) baseQty = 1 tradeQty = baseQty * qtyMultiplier 🎯D'Alembert Strategy The D'Alembert strategy is a more conservative progression method than Martingale. You increase your bet by one unit after a loss and decrease it by one unit after a win. This is a slow, incremental approach compared to the rapid growth of the Martingale system. How it Works: Start with a base bet (e.g., $1). After each loss, increase your bet by 1 unit. After each win, decrease your bet by 1 unit (but never go below the base bet). In order to find the position size on pinescript strategy, we can use following code // Initial position initialposition = 1.0 var position = initialposition // Step to increase or decrease position step = 2 if(ta.change(strategy.closedtrades) > 0) lastProfit = strategy.closedtrades.profit(strategy.closedtrades-1) position := lastProfit > 0 ? math.max(initialposition, position-step) : position+step Conclusion Position sizing is a crucial part of trading strategy that directly impacts your ability to manage risk and achieve long-term profitability. By selecting the appropriate position sizing method, traders can ensure they are taking on an acceptable level of risk while maximizing their potential rewards. The key to success lies in understanding each strategy, testing it, and applying it consistently to align with your risk tolerance and trading objectives.
TRADENATION:BTCUSDEducation
by Trendoscope
8
Hidden Risk: How to Uncover and Control Before You Click 'Buy'As seasoned traders, we understand that risk management isn't just a beginner's concept; it's the bedrock of sustainable profitability. We've moved beyond the rudimentary rules and are fluent in position sizing and stop-loss orders. But in the dynamic landscape of TradingView, where opportunities arise and vanish in the blink of an eye, even intermediate traders can fall prey to impulsive decisions that erode our hard-earned capital. The solution? Systematizing our risk assessment with a pre-trade risk profile. It isn't about reinventing the wheel but refining our approach to ensure that every trade aligns with our overall strategy and risk tolerance. It gives us an edge by keeping us disciplined. The Pitfalls of Complacency It's easy to become complacent when we've got a few winning trades under our belt. We start to feel invincible precisely when we're most vulnerable. We might skip steps, loosen our stop-losses, or increase our position sizes beyond our predefined limits. We are often driven by emotions rather than logic, and it's a slippery slope. Remember, even a well-defined risk management plan is useless if it's not consistently applied. Each trade carries unique risks influenced by factors beyond our standard calculations. Creating a Pre-Trade Risk Profile: A Refresher Before hitting that buy or sell button, click on TradingView to create a simple risk profile for the specific trade. Ask yourself a series of critical questions: 1. The Asset's Volatility: What's the current Average True Range (ATR)? How does it compare to the asset's historical ATR? Higher volatility demands wider stop-losses and potentially smaller position sizes. Are there any upcoming news events or economic releases that could impact volatility? Factor these in, as they can significantly alter the risk landscape. Be aware of, for instance, earning reports. 2. The Trade Setup: What's your entry point, and why? Is it based on an explicit technical signal, or are you chasing a move? Where's your stop-loss, and what is your rationale behind it? Is it placed below a key support level or based on a multiple of the ATR? What's your target price, and is it realistically achievable given the current market conditions? Avoid setting overly ambitious targets that expose you to unnecessary risk. 3. The Correlation Factor: How does this asset correlate with other positions in your portfolio? Are you inadvertently increasing your exposure to a specific sector or market trend? Could a single event trigger losses across multiple positions? Diversification is key, but it requires careful consideration of correlations. 4. The Time Factor: What's your intended holding period for this trade? The longer the timeframe, the greater the potential for unforeseen events to impact your position. Does your stop-loss need to be adjusted based on the timeframe? A wider stop-loss than a day trade might be necessary for a swing trade. 5. The "Gut Check": Are you comfortable with the potential loss on this trade? If the answer is no, it's a red flag. Either reduce your position size or reconsider the trade altogether. Are you trading based on a well-defined plan, or are emotions driving your decision? Be honest with yourself. From Profile to Action: Implementing Your Assessment Once you've answered these questions, you have a clearer picture of the trade's risk profile. Use this information to: Fine-tune your position size: Ensure it aligns with your pre-determined risk per trade (e.g., 1-2% of your capital). Set your stop-loss: Place it strategically based on the asset's volatility and your chosen support/resistance levels. Determine your risk/reward ratio: Is the potential profit worth your risk? Aim for at least a 1:2 or 1:3 risk/reward ratio. Bonus Tip: Develop Your Risk Score System Consider creating a simple risk score system to streamline your risk assessment further. Assign points to different risk factors based on their potential impact. For example, here is the Trade Impact Estimator (T.I.E): Volatility: Low Volatility (Below Average ATR): +1 point Average Volatility (Within Average ATR): 0 points High Volatility (Above Average ATR): -1 point News Events: Major News Event Scheduled: -2 points Minor News Event: -1 point No News Event: +1 Point Correlation: High Correlation with Existing Positions: -1 point Low Correlation: +1 point Timeframe: Day Trade: +1 point Swing Trade: 0 points Long-Term Trade: -1 point Trade setup: Good Risk/reward ratio: +1 point Neutral Risk/Reward ratio: 0 points Bad Risk/Reward ratio: -2 points Set Thresholds: Total Score of +3 or higher: Potentially a lower-risk trade, consider proceeding as planned. Total Score between 0 and +2: Proceed cautiously; consider reducing position size. Total Score of -1 or lower: Re-evaluate the trade, widen your stop-loss, significantly reduce position size, or avoid the trade altogether. Disclaimer: This is a simplified example. You can customize your risk score system to include additional factors and adjust the point values based on your own trading style and risk tolerance. You can also assign more points to factors that have historically impacted your trading results. It's crucial to backtest and refine your system over time. The Takeaway Mastering risk management is a continuous journey. By incorporating a pre-trade risk profile into our routine, we elevate our trading from reactive to proactive. We transform ourselves from gamblers to calculated risk-takers. On TradingView, where information flows ceaselessly, this disciplined approach is not just an advantage; it's a necessity. So, refine your process, stay vigilant, and make your trades profitable.
COINBASE:ETHUSDEducation
by hydtie
TotalCrypto Market Pullback: What's Next for the Bull Run?Hello, crypto enthusiasts! How are you today? I hope you're doing well and not letting this price action ruin your day. Times like these can be tough if you're unprepared or trading with emotions instead of following a proper plan or system. This chart represents the **Total Market Cap** of cryptocurrencies, and as we can clearly see, it's heading down. Today marks the second consecutive day of downside price action, accompanied by increased volume. Yesterday was the ideal exit point for the long trade that started after the U.S. elections. The signal was simple: **price pierced the PSAR**, indicating that the trade should be closed. While this index doesn’t represent an actual tradable position, it reflects the system's logic. Since this index aggregates the price action of all crypto assets, its decline suggests that most crypto assets are also experiencing downside pressure. While exceptions exist, this is the general trend. Technical Analysis with Oscillators - **RSI**: The Relative Strength Index has dropped from overbought levels (above 70) and is now at **~52**, signaling weakening bullish momentum. This suggests a potential continuation of the downtrend. - **MACD**: The MACD line is trending down and crossing below the signal line, which indicates bearish momentum. This crossover often signals a further downside. - **OBV**: The On-Balance Volume is showing a decline, confirming that selling pressure is dominating the market, supporting the bearish move. What’s next? - **First Target**: The 2021 top, marked by the black line, where we may see a reaction. - **Second Target**: The **0.236 Fibonacci retracement level**, which provides another possible support area. Of course, nothing is ever certain in trading. Tomorrow, the market could rally and ignore all current signals, but for now, the price appears to be trending downward. A few reminders: - In crypto, things rarely go the way we want. - Stay prepared for every scenario and keep your portfolio ready to re-enter the market. - Avoid letting hope and fear dictate your decisions—they won’t lead to profit. I'll keep monitoring the markets and share my thoughts as they develop. If you found this analysis useful, feel free to like, share, or comment below. And as always: **stay safe and keep calm!**
CRYPTOCAP:TOTAL
by vagada
Position Sizing: Learning to Lose Position sizing is one of the components of a trading plan, and it's important to be just as disciplined and consistent with this as with all other parts of the plan. Position sizing is defining how much we will risk for each and our objective is to consistently get the most profit with the least amount of risk. So, how much should you risk per trade? There is no one-size-fits-all answer, but to manage our risk consistently, we must establish simple, objective, and common-sense rules grounded in the realities of trading. Let's take a look at some of those realities • As traders, we should expect to lose more often than win and must learn how to manage losses effectively. • At some point, we will face drawdowns with many consecutive losses. • Successful trading results from a series of many trades and the compounding of gains, not just from being right on one or a few trades. In the video, I will show a simple guideline for calculating how much to risk per trade based on your risk tolerance over a series of trades and a drawdown number. I'm going to give you a default drawdown of 30 consecutive losses. For example, if you have a $10,000 account and don’t want to lose more than 15% ($1,500) of your account in drawdowns, you would divide $1,500 by the default drawdown of 30 stops, which would give you $50 per trade (1/2% of the account per trade). This plan allows you to lose 30 times in a row while staying within your risk tolerance. This doesn’t mean you have to risk the entire $50 per trade; consider it a maximum amount. If you are relatively new to trading or still fine-tuning your approach, I suggest trading very small amounts. Less than 1/4% of your account balance. Choose what feels comfortable and stick to it consistently. This allows you to make many trades while learning and not damage yourself. Be deliberate and create a plan to earn the right to size. For instance, require at least a small profit after two months and comfort with your method before incrementally increasing your risk per trade. Repeat this process every two months before increasing your size again. It's this kind of work that helps to balance your psychological mindset. You don't get that from books about trading psychology, you get it from grounded and deliberate practice. Use my position sizing calculations as guidelines and adjust accordingly. Once it is set, be consistent in what you do.
NASDAQ:ASOEducation
by ShaneBlankenship
Avoid Forex Mayhem with Good Risk ManagemenTrading forex? Stop gambling with your capital! This video exposes the massive mistake new traders make - using inconsistent lot sizes. It's a recipe for disaster, blowing accounts and crushing dreams. But there's good news. Discover the secret weapon of successful traders: consistent lot sizing. In this actionable video, you'll learn: Why fluctuating lot sizes blindfold you to risk and leave you exposed The simple formula to calculate safe and sustainable lot sizes How consistent sizing fuels confidence and boosts profits Bonus tips to maximize your forex trading performance Say goodbye to trading nightmares and hello to controlled growth! Watch this video now and take control of your forex future. P.S. Don't be the trader left behind. Watch before it's too late!
Education
by fxtraderanthony
Kelly Criterion and other common position-sizing methodsWhat is position sizing & why is it important? Position size refers to the amount of risk - money, contracts, equity, etc. - that a trader uses when entering a position on the financial market. We assume, for ease, that traders expect a 100% profit or loss as a result of the profit lost. Common ways to size positions are: Using a set amount of capital per trade . A trader enters with $100 for example, every time. This means that no matter what the position is, the maximum risk of it will be that set capital. It is the most straight-forward way to size positions, and it aims at producing linear growth in their portfolio. Using a set amount of contracts per trade . A trader enters with 1 contract of the given asset per trade. When trading Bitcoin, for example, this would mean 1 contract is equal to 1 Bitcoin. This approach can be tricky to backtest and analyse, since the contract’s dollar value changes over time. A trade that has been placed at a given time when the dollar price is high may show as a bigger win or loss, and a trade at a time when the dollar price of the contract is less, can be shown as a smaller win or loss. Percentage of total equity - this method is used by traders who decide to enter with a given percentage of their total equity on each position. It is commonly used in an attempt to achieve ‘exponential growth’ of the portfolio size. However, the following fictional scenario will show how luck plays a major role in the outcome of such a sizing method. Let’s assume that the trader has chosen to enter with 50% of their total capital per position. This would mean that with an equity of $1000, a trader would enter with $500 the first time. This could lead to two situations for the first trade: - The position is profitable, and the total equity now is $1500 - The position is losing, and the total equity now is $500. When we look at these two cases, we can then go deeper into the trading process, looking at the second and third positions they enter. If the first trade is losing, and we assume that the second two are winning: a) 500 * 0.5 = 250 entry, total capital when profitable is 750 b) 750 * 0.5 = 375 entry, total capital when profitable is $1125 On the other hand, If the first trade is winning, and we assume that the second two are winning too: a) 1500 * 0.5 = 750 entry, total capital when profitable is $2250 b) 2250 * 0.5 = 1125 entry, total capital when profitable is $3375 Let’s recap: The trader enters with 50% of the capital and, based on the outcome of the first trade, even if the following two trades are profitable, the difference between the final equity is: a) First trade lost: $1125 b) First trade won: $3375 This extreme difference of $2250 comes from the single first trade, and whether it’s profitable or not. This goes to show that luck is extremely important when trading with percentage of equity, since that first trade can go any way. Traders often do not take into account the luck factor that they need to have to reach exponential growth . This leads to very unrealistic expectations of performance of their trading strategy. What is the Kelly Criterion? The percentage of equity strategy, as we saw, is dependent on luck and is very tricky. The Kelly Criterion builds on top of that method, however it takes into account factors of the trader’s strategy and historical performance to create a new way of sizing positions. This mathematical formula is employed by investors seeking to enhance their capital growth objectives. It presupposes that investors are willing to reinvest their profits and expose them to potential risks in subsequent trades. The primary aim of this formula is to ascertain the optimal allocation of capital for each individual trade. The Kelly criterion encompasses two pivotal components: Winning Probability Factor (W) : This factor represents the likelihood of a trade yielding a positive return. In the context of TradingView strategies, this refers to the Percent Profitable. Win/Loss Ratio (R) : This ratio is calculated by the maximum winning potential divided by the maximum loss potential. It could be taken as the Take Profit / Stop-Loss ratio. It can also be taken as the Largest Winning Trade / Largest Losing Trade ratio from the backtesting tab. The outcome of this formula furnishes investors with guidance on the proportion of their total capital to allocate to each investment endeavour. Commonly referred to as the Kelly strategy, Kelly formula, or Kelly bet, the formula can be expressed as follows: Kelly % = W - (1 - W) / R Where: Kelly % = Percent of equity that the trader should put in a single trade W = Winning Probability Factor R = Win/Loss Ratio This Kelly % is the suggested percentage of equity a trader should put into their position, based on this sizing formula. With the change of Winning Probability and Win/Loss ratio, traders are able to re-apply the formula to adjust their position size. Let’s see an example of this formula. Let’s assume our Win/Loss Ration (R) is the Ratio Avg Win / Avg Loss from the TradingView backtesting statistics. Let’s say the Win/Loss ratio is 0.965. Also, let’s assume that the Winning Probability Factor is the Percent Profitable statistics from TradingView’s backtesting window. Let’s assume that it is 70%. With this data, our Kelly % would be: Kelly % = 0.7 - (1 - 0.7) / 0.965 = 0.38912 = 38.9% Therefore, based on this fictional example, the trader should allocate around 38.9% of their equity and not more, in order to have an optimal position size according to the Kelly Criterion. The Kelly formula, in essence, aims to answer the question of “What percent of my equity should I use in a trade, so that it will be optimal”. While any method it is not perfect, it is widely used in the industry as a way to more accurately size positions that use percent of equity for entries. Caution disclaimer Although adherents of the Kelly Criterion may choose to apply the formula in its conventional manner, it is essential to acknowledge the potential downsides associated with allocating an excessively substantial portion of one's portfolio into a solitary asset. In the pursuit of diversification, investors would be prudent to exercise caution when considering investments that surpass 20% of their overall equity, even if the Kelly Criterion advocates a more substantial allocation. Source about information on Kelly Criterion www.investopedia.com
Education
by sofex
4
Position Size Calculation with Fees - Handle any LeverageExample: The account size is $4500. We risk 2%, 90 cash, for this 2R trade. If the trade idea is a success we would now have 4678 cash in our account a profit of: 178 cash And if loss, a total of 4410 cash, 90 cash loss) Is this correct? Explanation: The example seems correct but only without the fees in calculation. Even small fees like e.g. 0.04% Taker (market orders) and 0.02% Maker (limit orders) add up a lot. A lot! The example does need a position size of $56250 , which would be $22.5 in fees just to open the position and the same amount again when the stop loss (market order) triggers or $11.25 when exit with a limit order. The example does clearly need a leverage of 15 or higher to open that position size. - Tradeable balance with 15x leverage: 4500 * 15 = 67500 - And to get a loss of 90 cash within 0.16 %: 56250 / 100 * 0.16 = 90 See Image on Chart: Calculation without fees We will be fine with any kind of Leverage if we calculate it like that on every trade. The PnL is calculated from the real account balance. So we are on the right track to not blow our account. If we calculate it with the Fees in mind, the example with 0.04% fees for open and close, then the position size would be $28125 See Image on Chart: Calculation with fees The calculations show, even when it hits the Profit Target, the real Risk Reward lowers by a large amount . (The Example uses the same taker fee for open and close) I personally recommend to automate those ever recurring calculations and set the orders via an API. Relative easy to code in e.g. Python. I'm not allowed to link any external links here but some tools can be found on my Twitter (I'm not really active there otherwise): - Some link to a Microsoft Excel sheet, which was used for the calculation images. It may be useful for some, just make a copy. - And a public open source API Trade App can be found on my GitHub, link in the same Twitter feed. No other funny links else. And as last goodie: A small snippet example used in my automated strategies in PineScript, strategy.equity represents the account balance: //Example 0.001 is minumum order varip input_mathround = input(3, 'Decimal Math Round Size') varip pnllosspercent = input(2, 'Dynamic PnL Loss - Percent of Balance') getLongSizeDynamic(_entry, _sl) => pnl = strategy.equity / 100 * pnllosspercent sl_percent = (_entry - _sl)/_entry size_cash = pnl / (sl_percent*100) * 100 size_r = 1 / _entry * size_cash size = math.round(size_r, input_mathround) size There are for sure different ways to optimise the math for the own liking. This 'tutorial' is meant to give small insight into a proper position sizing, that you may too will not fear the leverage as useful tool when used correct. With the calculations above, no matter if 10, 50, 100 or even crazy 1000x Leverage shall not blow our accounts! Still always keep the fees in mind, they take our money!
INDEX:BTCUSDEducation
by Hhan44
Position sizing 101 - how to avoid crippling lossesPosition sizing is determining the correct size of the position based on the amount of money you risk on the particular trade. Before you can do that, you need to figure out what is the maximum acceptable risk of the trade. That risk is usually expressed as a % of your balance, that you are willing to lose. To make sure you don’t lose more than this amount traders set a Stop Loss order which is the real maximum exposure of your position. If you don’t use a stop loss, you are exposing your entire portfolio! Where to put a stop loss? That’s where Technical Analysis can be handy. The majority of retail traders would look at the chart to find out – usually behind some support/resistance level or based on some volatility indicator, such as ATR Rule of thumb: Risk between 1-3% of your portfolio balance on each position. This way any single individual loss won’t wipe your account and break your spirit. And more importantly, even a string of losses will leave you with enough ammunition to recoup the losses. Have a clear approach to risk: 1. Set a risk limit for each trade, asset in general, day, week, and month (you won’t risk more than X account) 2. Determine the right position size and start small 3. Increase the position size of trades slowly if your account grows 4. Lower size or switch back to paper trading if your account doesn’t Two types of position sizing methods: Fixed and flexible Fixed position size Using the same position size for every trade Good for finding out if your strategy has an edge Make sure you come back and reevaluate position size periodically. Flexible position size Using a percentage of the current balance Cluster of wins makes every following win larger Cluster of losses makes every following loss smaller How to calculate the correct position size: You need to know 1. Trading account size 2. Acceptable risk (in % per each trade) 3. Invalidation point (in form of a distance from the open price) The formulae: Position size = Trading account size x Acceptable risk / Invalidation Example: 1. Trading account size = $10,000 2. Acceptable risk = 1% 3. Invalidation point = 4% drop in market price Position size = $10,000 * 0,01 / 0,04 = $2,500 This way you will always risk losing $100 no matter where your Stop Loss goes! If Stop Loss must be wider, say 8%, the calculation is: Position size = $10,000 * 0,01 / 0,08 = $1,250 Doubling the distance to our stop loss has us reducing our position size by half to maintain the same possible loss. How to set position size in Tradingview 1. Use the Long position or Short position drawing tool 2. Input your account balance 3. Select the risk you're willing to undertake - either as a % of your account balance or as a monetary value 4. Enter the market price of your Stop Loss 5. Look at the "Quantity" field in the drawing tool = that is the position size you should use to adhere to your risk settings.
CME_MINI:ES1!Education
by CleoFinance
2
When to up your share size?Many traders have 2 or more trade set ups. It is important to know the following: 1)The risk of your trade must be in accordance with the winning percentage of the trade set up. 1)Your share size should increase or decrease in accordance with the winning percentage of the trade set up. * Share size increase must be in accordance to you account size (account management) These concepts are what separates really good traders from average traders.
BEducation
by UnknownUnicorn37963351
3
Position Sizing StrategiesPosition Sizing Traders spend much of their time looking at charts and analyzing using technical or fundamental analysis, or a combination of both. While this indeed is a very good thing to spend time on, not all traders take their time to focus on risk management, and more specific position sizing. I see a lot of new traders or old traders which trade only to have their accounts blown up by taking random positions with no plan whatsoever. Proper position sizing is a key element in risk management and can determine whether you live to trade another day or not. Basically your position size is the number of shares you take on a trade. It can help you from risking too much on trade and blowing up your account. Without knowing how to size your positions properly. You may end up taking trades that are far too large for your account. In such cases, you become highly vulnerable when the market moves even just a few points against you. Your position size or trade size is more important than your entry and exit when trading or investing. You can have the best strategy in the world. But if your trade size is too big or too small, you will either take too much or too little risk. So how do you prevent yourself from risking too much? How do you know the right quantity to buy or to sell when you initiate a position? Let's say you have $10,000 in your account, and there's a stock valued at $100 you like and want to buy. Do you buy 100 shares, 10 shares, or some other number? This is the question you must answer to how to determine your position size. If you decide to spend your entire account balance and buy 100 shares, then you will have a 100% commitment to the stock and this is not indicated also in taking a position that represents a large portion of your total portfolio. There is also the opportunity cost involved, you will have to pass up other trades that you may have liked to enter. Position Sizing is a critical issue that a trader needs to know beforehand and to do on the fly. It's as important as picking the right stock or currency to invest. Position Sizing Strategies ☀️ There are several approaches to position sizing and I will run down some of the more popular ones. 1️⃣ The first one and the most common one is "Fixed percentage per trade". Position Sizing can be based on the size of an overall portfolio. This means a percentage of that overall capital will be predetermined per trade and will not be exceeded. That would be 1% or even 5%. This fixed percentage is an easy way for you to know how much you are buying when you buy to use a simple example of fixed percentage position sizing. Let's take again the $10,000 account size and a $100 stock. If you take a simple one-person position based on your account size that comes down to a single share, you may be thinking you are no better than the person with a $100 account buying one share. The difference is that the $100 account holder has a 100% position size while the $10,000 account holder is putting just one percent at risk. Which position size allows a trader to sleep better at night? Of course, the second position sizing helps control the risk. A 1% hard limit on each trade allows you to tolerate many losses in your search for profits. Protecting your capital is your primary job. Your secondary job is allowing room in your portfolio to find other trading opportunities. The fixed percentage amount is an easier approach to accomplishing this 2️⃣ The second risk management approach involves a "fixed dollar amount per trade". This approach also uses a fixed amount for this time. It's a fixed dollar amount per trade, rather than a percentage of the actual portfolio. This involves choosing a number again and using the same $10,000 portfolio as an example. So you decide you won't spend any more than $200 on any trade. For traders with small account sizes, this can be an attractive approach because it limits how much you can lose. However, it also limits what stocks you can buy. You will have to roll out some securities based solely on their price. Of course, this is not necessarily a bad thing. 3️⃣ The third approach is "volatility-based position sizing" A more complex approach, but one that allows for more flexibility is position sizing based on the volatility of the security you plan to buy. It's more dynamic because it doesn't treat each stock the same. This approach allows you to drill down and exercise finer control over your portfolio. For example, growth stocks will invariably be more volatile, and that volatility will be reflected in your portfolio. To reduce that overall risk on your portfolio. You wouldn't buy less high volatility stocks than you would lower volatility stocks. You can measure volatility with something as simple as a standard deviation over a given period, say 15 or 10 trading days. Then depending on the deviation, you adjust the number of shares you buy when you initiate a position. This allows lower volatility stocks to have more weight in your portfolio than higher volatility ones. Position Sizing based on this ideology lowers the overall volatility within a portfolio. This strategy is frequently used in large portfolios. Even longer-term traders and investors face position sizing questions for them when the price of a security with their holding goes down. It represents more value. Adding to their position, in this case, is referred to as averaging down. Long-term traders can decide to average down using similar position sizing approaches by risking either a fixed dollar amount or a percentage amount when the stock trades down you can use standard deviation here as well to help figure out the dollar amount. Some additional common sense risk parameters seem worth mentioning and may be incorporated into your trade plan. For example, Once you've figured out how much you're comfortable losing a stop loss level for each trade should be determined and placed in the market. A seasoned trader will generally know where to put their stop loss orders after having optimized their trading plan and chart analysis is often performed when setting stop-loss orders rules of thumb should be followed when you use stops to manage risk on your positions. By now I hope you realized that correct position sizing is crucial. You should always consider how much you buy when you buy and also know how you came up with that number. Regardless of your account size. Take the time to come up with a consistent approach that matches your trading style and then stick to it. You can incorporate flexibility as well. For example, if you're willing to take more risks with your portfolio, you can die a lot of the person that you use. sound money management techniques can help make an average trader better and a good trader becomes great. For example, a trader that is only right half of the time, but gets out of losing trades before the loss becomes significant and knows the right winners to a substantial profit would be way ahead of most others with trade with no clear plan of action whatsoever. And you have to find the right balance because if you risk too little and your account won't grow and if you risk too much, your account can be destroyed in a few bad trades. 🌱 If you found value and learn something new, leave me a like to show your support. 👍🏼❤️
INDEX:BTCUSDEducation
by parissap
23
📌Position Sizing AND Stress CurveTry to find where your current stress level is on the diagram. If you are a trader and already have taken position , how much is your position size % ? Do you think there is a correlation between your stress level and your current position size , then subsequently your performance ? If you are in red level, now is a good time to seek some serious change. Trading in itself is a very stressful job, especially when we are not proficient in the psychology of trading and do not pay much attention to the important rules of risk and capital management. maybe Slipping only one 1% of these rules has terrible consequences for us. WHAT IS STRESS (in general)? Everyone experiences stress at different points in their life, and in small doses it is essential to motivate us. Too much stress, though, can be overwhelming and leave us burnt-out, filled with anxiety or anger, and unable to act. Stress is a feeling of emotional or physical tension. It can come from any event or thought that makes you feel frustrated, angry, or nervous. Stress is your body's reaction to a challenge or demand. In short bursts, stress can be positive, such as when it helps you avoid danger or meet a deadline Stress causes wear and tear of our bodies due to demands made by our life. The Public Health Services estimate that there are one million premature deaths in America each year. In this, 75% of the people were suffering from stress-related disorders. Americans are suffering from various problems. The number of Americans suffering is high in number. The various problems are: 30 million blood vessel diseases 1 million heart attacks 8 million cases of ulcers 12 million cases of alcoholism WHAT DOES IT FEEL LIKE? Problem stress can manifest in many different ways: wanting to relax but being unable to let go feeling prolonged anxiety or worry feeling depressed and unmotivated sleep problems increased use of alcohol / drugs to self-medicate Stress can also cause a variety of physical symptoms: change in appetite tightness and pain in shoulders, neck and back increased use of alcohol / drugs to self medicate digestive problems autoimmune problems (eczema, arthritis, ulcers) Trading-Specific Stresses: In the above paragraphs, we have seen the different stress subsequences in our social life. But there are also many stressful situations in trading that traders perceive. Trading is inherently a job full of anticipated and unforeseen risks. .Each of which can cause stress on the trader and affect his performance! Even Being idle and not doing anything can also be stressful. The fact that you could make money if you were present in the market is itself very stressful. You can watch your position double overnight sometimes if you don’t do anything. Similarly, you may sit on a losing trade while it goes down in value. This loss situation is stressful, which is a result of doing nothing. As a trader ,we trade the risk to make money , it sounds very exiting and enjoying when we can control our risk and profit ! there is a tiny distinction and span between successful traders and unsuccessful traders ! When they can manage their position size and risk/reward in such a way that they can have the most profit and the least loss with maximum performance. abnormal Stress limits our ability to handle a large amount of information in trading. Which is why we are not successful most of the times. For some traders who use to trade with big position size( more than1%- 5% of their total net) , stress is equivalent to losing. If they suffer a lose In these cases, because a large amount of position is involved and it is difficult to control it can be the Biggest in the speculative loss, which is a trading-specific stress. Since losses are unacceptable for many, they tend not to close their position in the hope of recovering their losses , so their losses will get bigger and bigger . The psychological impact of a large loss upon an average trader can be devastating, because Daniel Kahneman in the book of Thinking, Fast and Slow by , he says that for human- being the impact of any loss is bigger than impact of equivalent profit ! -In a pessimistic scenario ,Suppose you open an average of 10 positions a day, and if all your positions are closed at a loss >>With a risk of 1% per trade; You do not lose about 10% at the end of the day >>But with 5% per trade, you lose more than 37% at the end of the day >>And with 10%,you lose more than 60% of whole capital after 10 unsuccessful trade per day . So in the same proportion; Size position can greatly affect our stress level and disrupt our performance! In this situations, our brain can no longer make any right decisions and emotions overwhelm us especially when we are at a loss, and then the likelihood of committing human error is greatly increased. Conclusion So in this article, we can figure out what can greatly affect our stress in trading is the amount of volume in a trade especialy in perpetual future markets , Why does a trader increase the position size with thoughtless, recklessness and carelessness, maybe it is due to ignorance or maybe it is high self-confidence. Anyway, if one can 100% predict the future trend of a trade, one might be able to earn hundreds or thousands or even millions of dollars in a short time with the Leverage X100, but the problem is that we are in the trading and financial markets with probabilities. We are dealing and no one can predict even 10% of the next moves with confidence. So It's so important to control the exact amount of your risk ,loss and possible profit in each trade by choosing the right amount for position size and then the risk /reward ratio. Every person reacts to stressful events differently. What might be stressful for one person might not be stressful for another one or maybe a pleasurable game . All these together produce fear and anxiety in people. The purpose of this article is not to let you know various types of stresses in trading , It was more about the stress of position size in particular and how it can affect your trading style. But the result being in high stress level for all is loss in trading. You can at least now realize how dominating stress can be. In coming articles, we will help you protect from its effects. You can self-evaluate yourself on parameters like stress susceptibility, stress exposure and stress protection. In general, we will try to reduce general stress and trading specific stress. Later we will also discuss stress prevention techniques, relaxation procedures, and how not to allow stress to affect your trading performance. (The reason that inspired me to write this article was mostly because of a friend who is a trader and he had invested in Luna and was severely bankrupt and now more than his financial problems he is struggling with a lot mental and psychological problems , and was asked me for help. Maybe it was his bad luck but his problem was when He was optimistic for a immediate recovery after any Luna's downfall , he traded in a large position and with every further reduction he bought again at a lower level in the hope of a return to compensate, but we all saw how far Luna decreased . although this strategy( DCA ) may work well sometimes , but if he had considered the position size and risk measurement , he didn't lose more than 200k overnight.) Source: lifehack.org- wetalktrade.com- phil-hills.com
Education
by PRO_SMART_Trader
3
When you should use leverage in your trades?When you should use leverage in your trades? I’m going to answer this question, but first, we have to mention two other questions to be answered. Q1: What is a reasonable trade? An order in which the entry point, stop loss, and take profit are already pre-defined based on a good return strategy or rules. Q2: What is money management? Money management is to determine the percentage of risk on the total balance in each order and to know what your position size will be and how much your potential loss will be. We need to do some calculations to answer the first question. Let’s suppose your account balance is $100 and the maximum risk on your balance for each trade is 5%. This means that on a reasonable trade, your loss will be $5 at most. Besides that, you have a good trading opportunity with an entry point at $10, stop loss at $9, and profit point at $12, i.e. 10% potential risk and 20% potential reward for the position. Since we cannot lose more than $5 of our balance, we need a position size where the potential loss will not exceed $5. Which we can calculate with this formula: (Max risk on balance / position risk * 100). Which would be $50 in our case.  This means that we are only allowed to include $50 out of $100 in this trade; this would be $5 after a 10% loss.  Everything is normal and we can afford it, so we will do the trade. Now, let’s increase the max risk on balance to 20%. It means our potential loss would be at most $20. By doing the same calculations considering the same reasonable trade with 10% risk, our position size will be $200 while we do not have more than $100, so where do we get $200 from?! Yep! Leverage would help you in this case. So benevolent, isn’t it?  In this case, your leverage would be 2 and you can open a $200 position, but don’t forget you increased your account risk from 5% to 20% already. Note that the risk will be applied to your real asset. If your balance is $100 and the leverage is 10, the exchange will give you about $1000 to buy or sell. While the 5% of $100 is $5, the 5% of $1000 would be $50, which is 50% of your real asset. So calculating the risk on leverage balance is practically meaningless! What if we had 10 orders simultaneously? It means $100 will be split between 10 orders. For ease of calculation, we consider every 10 trades to be the same as what we had above, while each trade would have 10% of $100. In these conditions, each trade would again have a $50 position, but leverage will be 5! Having said that, we can conclude that leverage alone is meaningless and finds meaning alongside reasonable trade opportunities and money management. In the above explanations, for the ease of calculation and context understanding, I used rand but not necessarily correct values. For example, a risk ratio of 5% on balance is a really high risk or in the example of 10 trades at once, it is wrong to consider your balance as $100 at the start of each trade. In the worst-case scenario, you should deduct the loss of the previous trade from your balance for the next trade. From the link below, you can access the tool I prepared to calculate the position details. bit.ly Feel free to give your constructive feedback.
Education
by bhnmzm
2