BitcoinEducation
Risk management. How much to risk per trade?
Updated
While not much is happening, remember to improve on your system more than anything else I believe.
Reading every book on TA doesn't matter if you have a dumb system where you're guaranteed to blow your account sooner or later.
Here's a friendly reminder on how much to risk on every trade.
Suppose a 50,000$ starting account.
*** Win 8 trades out of 10 on average. ***
2 losses in a row has a 4% chance of happening. Expect it to happen.
5 losses in a row has a 0.032% chance of happening. If that happens come on...
Calculations.
A/ Risking 10% account on each trade (starting 5k then 4500 etc).
2 losses in a row ==> Down to 40500. Down 9500.
5 losses in a row ==> Down to 29524. Down 20500.
B/ Risking 2% account on each trade ($1000 then $980 etc).
2 losses in a row ==> Down to 48020. Down 2000.
5 losses in a row ==> Down to 45200. Down 4800.
*** Let's say win 7 out of 10. ***
2 losses in a row has a 9% chance of happening. Will definitely happen regularly.
5 losses in a row has a 0.24% chance of happen. Should be a rarity but can happen! Very unlucky.
Calculations same as previously.
*** Win 5 out of 10 (rip). ***
2 losses in a row has a 25% chance of happening. Evertiem!
5 losses in a row has a 3% chance of happening. Enjoy!
10 losses in a row has 0.1% chance of happening. Unlucky!!!
A/ Risking 10% account on each trade.
2 losses in a row ==> Down to 40500. Down 9500.
5 losses in a row ==> Down to 29524. Down 20500.
10 losses in a row ==> Down to 17433. Down 33000. Hey whattap baggy?
B/ Risking 2% account on each trade.
2 losses in a row ==> Down to 48020. Down 2000.
5 losses in a row ==> Down to 45200. Down 4800.
10 losses in a row ==> Down to 40850. Down 9150.
What about an aggressive but still not too insane 5%
5 losses in a row ==> Down 11 grans.
10 losses in a row ==> Down 20 grans 40% loss.
Pretty harsh. Find your best strategy.
Most trading education sites recommend 1 or 2%.
If possible, it would be better to look at your past trades and calculate your hit rate figure how much you can risk BUT be conservative, for example you might be drunk at some time and start underperforming. Then you can easilly lose 5 times in a row so make sure you never go too crazy.
Also the better the trade the more you can risk, but that can be subjective and I bet alot of people would screw it up, so if unsure just stick to your plan.
Like buying a break at the top when overbought is way less good than buying at a monthly support with 5 min 15 min 1 HR and 4 HR RSI oversold...
Reading every book on TA doesn't matter if you have a dumb system where you're guaranteed to blow your account sooner or later.
Here's a friendly reminder on how much to risk on every trade.
Suppose a 50,000$ starting account.
*** Win 8 trades out of 10 on average. ***
2 losses in a row has a 4% chance of happening. Expect it to happen.
5 losses in a row has a 0.032% chance of happening. If that happens come on...
Calculations.
A/ Risking 10% account on each trade (starting 5k then 4500 etc).
2 losses in a row ==> Down to 40500. Down 9500.
5 losses in a row ==> Down to 29524. Down 20500.
B/ Risking 2% account on each trade ($1000 then $980 etc).
2 losses in a row ==> Down to 48020. Down 2000.
5 losses in a row ==> Down to 45200. Down 4800.
*** Let's say win 7 out of 10. ***
2 losses in a row has a 9% chance of happening. Will definitely happen regularly.
5 losses in a row has a 0.24% chance of happen. Should be a rarity but can happen! Very unlucky.
Calculations same as previously.
*** Win 5 out of 10 (rip). ***
2 losses in a row has a 25% chance of happening. Evertiem!
5 losses in a row has a 3% chance of happening. Enjoy!
10 losses in a row has 0.1% chance of happening. Unlucky!!!
A/ Risking 10% account on each trade.
2 losses in a row ==> Down to 40500. Down 9500.
5 losses in a row ==> Down to 29524. Down 20500.
10 losses in a row ==> Down to 17433. Down 33000. Hey whattap baggy?
B/ Risking 2% account on each trade.
2 losses in a row ==> Down to 48020. Down 2000.
5 losses in a row ==> Down to 45200. Down 4800.
10 losses in a row ==> Down to 40850. Down 9150.
What about an aggressive but still not too insane 5%
5 losses in a row ==> Down 11 grans.
10 losses in a row ==> Down 20 grans 40% loss.
Pretty harsh. Find your best strategy.
Most trading education sites recommend 1 or 2%.
If possible, it would be better to look at your past trades and calculate your hit rate figure how much you can risk BUT be conservative, for example you might be drunk at some time and start underperforming. Then you can easilly lose 5 times in a row so make sure you never go too crazy.
Also the better the trade the more you can risk, but that can be subjective and I bet alot of people would screw it up, so if unsure just stick to your plan.
Like buying a break at the top when overbought is way less good than buying at a monthly support with 5 min 15 min 1 HR and 4 HR RSI oversold...
Note
DLavrov posted the best idea rofl!He right fk winrate what the hell idgaf about winrate I want to be da best!
80-90% winrate pretty huge already and then take small losses and big winnnzzz
Sooo many people get baited by the "legends" like MPC, and they were calling me a hater when I criticize and calling him their god, now they lost their money and they're hating on him 100 times what I did lol.
I said this exactly would happen! :D
Note
Risk management:If BTC goes past its ath with no resistance above do NOT best against it (unless daily RSI at 80 and we went up 80% with no retrace, something like this...).
If BTC goes to ath (in 5 years? never? XD well in a long time in any case) I'd short it first time it gets there, but then on pullback I would go long and wait for 150% 50k easy!
Note
Thinking about it I got money spread out in 2 bank accounts + 5 different brokers and with time it will probably increase to more.Straight up impossible for me to lose everything at once even if I try my hardest.
I guess that can be a risk management method? Have money everywhere.
You also can't ever go all in...
Note
Security strategy:* All wallets and 2FA passphrases are encrypted on usb devices and split in several places, in bank safes or at least hidden someplace secure.
* Passwords etc apart from the ones you use often and remember saved on an offline PC in an encrypted drive containing a password protected Keepass file. As well as personal information, trading system etc.
* F2A on the phone
So all the devices I would use: An online PC with nothing on it, USB devices with passwords in them, an offline PC with regularly needed passwords on it that can't be remembered, a laptop with nothing on it, a phone with nothing but 2FA on it.
Everything is encrypted ofc, well enough that someone stealing a hard drive can't brute force it within a few weeks. If a hard drive disappears, time to change all passwords, fun!
* Tell every one how you do it.
Note
If you were looking for someone to tell you how to control your emotions I'm not the guy for the job, but I am aware that is part of risk management.I have never had any decision clouded by emotions, I never FOMO'd not a single time, I have never felt fear uncertainty etc.
And it's not only in trading, in any aspect of life I have always been like this (has worked against me in certain occasions at work when every one was panicking for no reason and angry and wondered why I looked as if I didn't give a fuck).
I also know I am not a psychopath (they feel nothing).
So in that aspect I actually have zero merit it's pure luck and I'm the least qualified person to give advice about that.
What I really really would like to know is if I'm suppressing these feelings, simply don't have them as I'm missing certain parts in my brain (lol), or do I simply function differently than every one else?
Note
I have a certain way of trading and "limited" growth as if something moves in my direction as I expected I'm getting out and not trying to double or nothing.I also don't trade crypto shitcoins that make 50% in a day.
I scale in with a certain amount and never risk more than planned for a given setup.
If I want to make more % ?
I would look at more than just a few majors & BTCUSD & ETH & LTC & Gold, as to find opportunities where I can go bigger and also aim for bigger returns (example very panic-oversold conditions so I'd expect a bigger bounce than usual) and I would also simply take more trades.
Let's say you have a very good system and you take 2 1% trade a day (that gives very fast growth already...), you could scan everything and take more better trades to make 3 times 1.5% a day.
For example...
Spending 5 months hunting for "the big one" that might make you 1500% is less than making a few percent every day, and not even talking about the money lost hunting these "big ones".
If it's excitement you want, go parachute jumping.
For some people I would recommend not taking a parachute.
Note
Risk management:How to make money.
If I were to trade EURUSD right now this is how I would spread my orders.
I do not look at risk:reward. If I lose I lose more than if I win.
Aiming for a 50-75 pips bounce I am 99% certain (or more) to win, so losing more than what I could win does not matter.
This is my method. It requires doing maths and calculating everything.
If you're not naturally good at it and not interesting in getting gud it's probably best you avoid something like this you're just going to risk making errors and losing big, most people do classical charting and go in with R:R entry set SL etc but I do not care for this, it's just one way to do things, it doesn't matter if 95% people do like this (not counting the FOMO "traders" that chase pumps they are "special" and not included in stats :D), it is not the only way to win.
Note
The red lines are approximate support levels.Note
One way to calculate how big the loss on a trade would be- just an example
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