Risk!!!
How To Calculate Risk/Reward To Trade & Invest In Crypto MarketHi everyone:
Today I want to make this educational video on how to calculate your risk/reward in trading and investing in the cryptocurrency market.
Many newcomers in the industry are not aware of the importance of risk management. So today let's give out different examples of them on how to properly calculate the $, %, and setting the SL/TP.
This video is intended to help traders and investors to understand how to calculate the amount to risk per trade, or per investment purpose.
I will give different examples of going long and short in trading, as well as buying coins for the purpose of investment.
Doesn't matter what crypto broker exchange you use, this calculation/formula will work, you will just need to do some simple math to get to the right numbers.
Example 1:
Want to go long on BTC in a trade
Scenario:
Trading Account $12,000
Risk 1% of your trading account
Want to go long on BTC when price hits $70,000
You want the Stop Loss @$66,000,
and a TP @ $80,000
Calculation:
Calculate your 1% of the trading account:
$12,000 Account x 0.01 $120 per trade
Divide the $ you willing to risk to the SL amount
$120 / $4000 = 0.03
Set your entry order or market order
for 0.03 BTC @ $70,000 price
0.03 x $70,000 = $2,100
(This is the amount you will need in your trading account
to execute this position.
If you have leverage then its less $ needed)
Set your SL at $66,000
If price hits your SL, your order would be
0.03 BTC x $66,000 = $1,980
$2,100 - 1,980 = $120 = 1% of your account
Set your TP at $80,000
If price hits your TP, your order would be
0.03 BTC x $80,000 = $2,400
$2,400 - $2,100 = $300 = 2.5% of your account
Example 2:
Want to go long on ADA in a trade
Scenario:
Trading Account $800
Risk 1% of your trading account
Want to go long on ADA when price hits $2.30
You want the Stop Loss @1.70
Calculation:
Calculate your 1% of the trading account:
$800 Account x 0.01 = $8 per trade
Divide the $ you willing to risk to the SL
$8 / $0.60 = 13.34
Set your entry order or market order
for 13.34 ADA @ 2.30 price
13.34 x 2.30 = $30.68
(This is the amount you will need in your trading account
to execute this position.
If you have leverage then its less $ needed)
Set your SL at $1.70
If price hits your SL, your order would be
13.34 ADA x $1.70 = $22.68
$30.68 - $22.68 = $8 = 1% of your account
Set your TP at $4.00
If price hits your TP, your order would be
13.34 ADA x $4.00 = $53.36
$53.36 - $30.68 = $22.68 = 2.83% of your account
Example 3:
Want to go short on TRX in a trade
Scenario:
Trading Account $54,000
Risk 1.5% of your trading account
Want to go short on TRX when price hits $0.11
You want the Stop Loss @ $0.13
Calculation:
Calculate your 1.5% of the trading account:
$54,000 Account x 0.0150 = $810 per trade
Divide the $ you willing to risk to the SL
$810 / $0.02 = 40,500
Set your entry order or market order
for 40,500 TRX @ 0.11 price
40,500 x 0.11 = $4,455
(This is the amount you will need in your trading account
to execute this position.
If you have leverage then its less $ needed)
Set your SL at $0.13
If price hits your SL, your order would be
40,500 TRX x $0.13 = 5,265
$5265 - $4455 = $810 = 1.5% of your account
Set your TP at $0.07
If price hits your TP, your order would be
40,500 TRX x $0.07 = $2,835
$4,455 - $2,835 = $1,620 = 2% of your account
Example 4:
Want to buy ETH to hold for long term as investment
Scenario:
Investing Account $20,000
Risk 10% of your investing account
Want to buy ETH to hold for long terms
Want to enter when price hits $4,900
Calculation:
Calculate your 10% of the investing account:
$20,000 Account x 0.10 = $2,000 per investment
Divide the $ you willing to risk to the price you want to enter
$2,000 / $4,900 = 0.4082
Set your entry order or market order
for 0.4082 ETH @ $4,900 price
0.4082 x $4,900 = $2000
(This is the amount you will need in your investing account
to execute this buy.)
You want to lose no more than 25% of your original $2,000 investment.
$2,000 x 0.75 = $1,500
$1,500 / 0.4082 = $3,674.67
Set your alert and SL at $3,674.67
If price hits your alert/SL, your order would be
0.4082 ETH x $3,674.679 = $1500
$2,000 - $1500 = $500 = 25% of $2,000
You want to gain about 50% of your original investment before selling.
$2,000 x 1.50 = $3,000
$3,000 / 0.4082 = $7,349.34
Set your alert and TP at $7,349.34
If price hits your TP, your order would be
0.4082 ETH x $7,349.34 = 3,000.00
$3,000 - $2,000 = $1,000 = 50% of $2,000
Example 5:
Want to buy MATIC to hold for long term as investment
Scenario:
Investing Account $1,500
Risk 20% of your investing account
Want to buy MATIC to hold for long terms
Want to enter when price hits $2.25
Calculation:
Calculate your 20% of the investing account:
$1,500 Account x 0.20 = $300 per investment
Divide the $ you willing to risk to the price you want to enter
$300 / $2.25 = 133.34 MATIC
Set your entry order or market order
for 133.34 MATIC @ $2.25 price
133.34 x $2.25 = $300
(This is the amount you will need in your investing account
to execute this buy.)
You want to lose no more than 50% of your original $300 investment.
$300 x 0.50 = $150
$150 / 133.34 = $1.1249
Set your alert and SL at $1.1249
If price hits your alert/SL, your order would be
133.34 MATIC x $1.1249 = $149.99
$300 - $149.99 = $150.01 = 50% of $300
You want to gain about 75% of your original investment before selling.
$300 x 1.75 = $525
$525/133.34 = $3.9373
Set your alert and TP at $3.9373
If price hits your TP, your order would be
133.34 MATIC x $3.9373 = $525
525 - $300 = $225 = 75% of $300
Any questions, comments and feedback welcome to let me know.
If you like more of these contents, like, subscribe/follow and comment for me to keep doing them. :)
Jojo
EURUSD clean short opportunityLooking at a shorting opportunity on the infamous EURUSD after a recent break below/ close below of structure - one negative here are the big wicks from March 2020 bit altogether a nice setup.
How to Backtest a Trading StrategyBacktesting is a manual or systematic method of determining whether a trading strategy or trading setup has been profitable in the past.
A trader should backtest a strategy to help determine if a trading strategy is likely a waste of time and money, or if it shows promise and profitability in a variety of markets.
While you can get software that does systematic backtesting… we prefer manual backtesting as it can be carried out by any type of trader,
It is a key component in developing an effective trading strategy. There are infinite possibilities for strategies, and any slight alteration will change the results. This is why backtesting is important, as it shows whether certain parameters will work better than others.
What Do I Backtest?
The first thing to note is that you don’t need a full trading strategy in order to start backtesting.
For example I personally am always looking at new trading setups and candlestick formation and then backtesting them to see how effective they are.
You can test small parts of a trading strategy before putting them all together.
And of course you can and SHOULD backtest your whole trading strategy in a number of different trading situations.
How to Backtest
1) You need data to use in testing… if you are testing short term strategies on small timeframes then use at least a few weeks of trading data.
If you are using higher timeframes then you should be using years of trading data.
2. Define the strategy parameters. Entry conditions, exit conditions etc. Include as many “If X happens then I will do Y” scenarios as possible so that your strategy is repeatable.
Its essential to include risk management in these parameters too. So decide on if you are risking a percentage of your account equally on each trade, what is that percentage. If you are managing your risk in another method, clearly define it as something you are able to measure.
ALL OF THESE PARAMETERS ARE WHAT YOU ARE MEASURING AND TESTING. THESE ARE THE ELEMENTS THAT YOU CAN CHANGE TO SEE WHICH ARE MORE OR LESS PROFITABLE.
3. Use the TradingView rewind tool to go back in time and remove the predictive nature of knowing where the chart will be headed.
You could go back in time and look for trades from a year, a month or a week in the past, depending on how far back you wish to look.
4. Analyse price charts for entry and exit signals. This can be done until all trades on the chart up to the current time have been located and marked or written down
(be aware that it can take some time and be prepared that you are unlikely to be able to do all of this backtesting in one session… it could take you a few sessions of backtesting and recording the trade outcomes to fully test a strategy.)
5. Once you have competed this process, then you can start to total all of the trade results up to see how profitable or unprofitable your trading strategy / setup has been over time.
What Goes Wrong in Backtesting
Typically the pitfalls and the ways that people fail at backtesting are based around not being through enough.
That could mean that people haven’t included enough data in the backtest.
It could mean that they left too many unknowns in the strategy so when using it in a live trading situation the strategy isn’t usable or realistic.
Also it could be that people don’t back test for long enough to see if the strategy is profitable or not. If you only have a small sample size of trade then even a short losing or winning streak of trades would dramatically affect the results. You need enough trades to show winning streaks, losing streaks and all between so that you can be confident that your strategy will be able to withstand those situations in live trading.
Imagine for example in your backtesting your strategy didn’t lose more than 2 trades in a row but when you start using it in live trading you get 5 losses in a row. This is a situation that hasn’t been tested so could show a different result.
The goal is to backtest for long enough and through enough so that nothing in live trading hasn’t been tested previously. While it may not be possible to fully achieve this… it should be the goal and you should feel confident enough that you have done everything possible to ensure this is the case.
US-market correction ahead of us?Discussed is our weekly update of the risk model for the US market.
Price action of the major US market indices and relevant indicators advise caution.
See our homepage for daily updates on trading recommendation for the major US-market indices and ETF's:
www.js-techtrading.com
Avoid Earnings RiskMy goal in my video ideas is to help traders become more successful and one of the primary ways to be successful is to NOT LOSE MONEY. One key way to avoid losing money is to avoid earnings risk in otherwise great trading setups.
The Best (and most simple) Risk Management Approach to TradingRisk management in forex, or any other trading, shouldn't be complex, rather it should be simple enough even for a kid to follow.
Our Risk Management approach comes down to 3 basic points,
1. Structured position sizing ( manage your exposure! )
2. A definite exit area ( always have a stop loss! )
3. Follow point 1 & 2 like a religion!
Hope this helps and good luck!
If you'll flip an account, when you will blow it again?3. If you flip an account, like you want, how long would it take to blow it again?
Let’s imagine you have a small account like $2000-$3000. What do you want from it? Most likely, you would like to live from it, so depending of a country you live in you’ll need somewhat between $600 to $2000 a month for a decent living, right?
In this scenario, you’ll need to make 20-100% of your account per month. In order to make this much money, you will need to be either a super lucky and super professional trader with an astonishing winrate and good consistent risk reward. Most likely you are not. I am not if you ask me. So I don’t have astonishing WR and good RR. So what can I do to make this much of money, when my trades are not so good? Any ideas? Yes, I can risk more per trade and HOPE this trade will go in my direction and also HOPE that somehow I will stay calm seeing all this huge profits just grow and grow, and also HOPE I will be able to not close the trade when the pullback happens, and also HOPE I will stay calm and emotionally stable if the trade after having being in big profits will turn back and go to breakeven or a drawdown. Sounds familiar? So actually how mentally strong this person should be to bear all these emotionally? And how many times in a row the the person will be able to do it? Is it realistic to expect consistency from this style of trading in the long term?
But ok, let’s imagine, someone is able to produce 100% a month from his $2k account? Can you imagine how emotional this person will feel? He definitely knows that 5-10% a month is already a great, great result (if done consistently though), and he just made 100%. He will probably think he’s the king of the universe and he will probably try to make even more than 100% that next month. Really the only thing he does is taking a big, big run off the high high cliff and soon he will be dead, meaning he’s account will be blown.
This kind of thinking will help me to better understand the absurd of the desire to flip an account, at least for myself.
Why chasing % should be your focus and not pips!Here we look at 3 traders, all claiming to have a winning trade with 100 pips - however, with very different % gains on their accounts.
The main part of trading is profitability, you can not pay your bills with pips.
This explains what you need to focus on and be aware of!
Hope it helps,
Regards
Darren
Trade Planning - How to Trade PlanThis video explains how to effectively trade plan to limit your risk and to maximize your gains. When it comes to Risk Management and Trade Planning, it's important to maintain a clear mind about the possibility of the asset your assessing going in either bullish or bearish direction.
Furthermore, this video explains some ideas on how and where to place stop losses based upon entry confirmations and provides insights about position managing your trades as they develop into a winner.
I hope you find this video informative and hope you use this video to your best advantage with your day-to-day trading activities.
Thanks for watching. Always remember to trade safe - trade well.
Regards,
Michael Harding
RISK DISCLAIMER
Information and opinions contained with this video are for educational purposes only and do not constitute trading recommendations. Trading Forex on margin carries a high level of risk and may not be suitable for all investors.
Trading the Volatility of Volatility Itself !?Hope this idea will inspire some of you !
Don't forget to hit the like/follow button if you feel like this post deserves it ;)
That's the best way to support me and help pushing this content to other users.
Kindly,
Phil
EURUSD(1D) - long with controlled losses. I explain why there is a long position in this drawing on my probability estimates - taken from technical indicators.
Note carefully the word 'controlled loss' means stoploss which means that's money one is prepared to lose. I never avoid talking about losses, as it is the most important thing to control in trading.
Disclaimers : This is not advice or encouragement to trade securities. No predictions and no guarantees supplied. If you make decisions based on opinion expressed here and you lose your money, kindly sue yourself.
ORBEX: Risk Softens As Iran's Retaliation Options LimitedIran will most likely retaliate and perhaps the first move will involve the disruption of oil shipments through the State of Hormuz.
But, what will China say to that, given nearly 50% of its imported oil comes from the Gulf region?
For now, risk is scaling back and that’s obvious from yen outflows. Watch how the euro and dollar could perform over the next few days.
Timestamps
USDJPY 4H 01:30
EURUSD 4H 03:30
Trade safe
Stavros Tousios
Head of Investment Research
Orbex
This analysis is provided as general market commentary and does not constitute investment advice
ORBEX: EURGBP Ready To Reverse? AUDJPY Still Correcting!In today’s market insights video recording, I talk about EURGBP and AUDJPY FX Minors.
Euro is affected by a report that a phase-1 deal is highly unlikely by the end of this year as the Chinese want rollbacks pushed to May 2020 and the US Congress just passed a bill supporting Hong Kong protesters; going against China again!?
Safe-haven flows were also increasing of course, following the report, allowing yen to appreciate against risk assets with AUDJPY attracting our attention once again!
Pound, on the other hand, is somewhat muted as the first televised debate between Boris and Corbyn was seen as a draw. This means that the euro's somewhat better performance could allow EURGBP reverse and move higher!?
Stavros Tousios
Head of Investment Research
Orbex
This analysis is provided as general market commentary and does not constitute investment advice.
CADNOK: Interesting situationsCADNOK has make some interesting trend switches, that may afford trading opportunities.
I explore the probabilities.
This is not a recommendation to trade. Your losses are your own.
EURNZD: Opportunity and riskThis is a very wild instrument so be careful.
No predictions here. I'm showing how I'm preparing for this one.
GET READY: ETHEREUM The video shows a contracting wedge into a zone of congestion. This is sometimes a reversal pattern.
I make no predictions. I explain carefully about losses and risk management of this situation.
Disclaimer: This is not financial advice or an encouragement to trade in securities. No liabilities accepted. Your losses are your own. This means you sue yourself if you lose your money.
Chế công cụ đo Risk Reward bằng Fibonacci RetracementVui lòng xem video, do mic bị hư nên không có tiếng, nhưng video đã rõ cách cấu hình, lưu lại template.
Lưu ý số 3 là tỉ lệ RR=2, không được như bên MT4/MT5.
ORBEX: GBPCHF, AUDJPY - Tradetalk & Brexit Signals Mixed! In today's #marketinsights video recording I analyse #gbpchf and #audjpy minors!
Both pairs are showing an identical pattern and are indeed influenced by:
AUDJPY
- Tradewar tensions but latest from positive developments on the back of a potential partial deal Chinese are willing to do
- Positive Home Loans in AU and negative BoJ Corporate Goods Price Index figures
GBPCHF
- Blury Brexit developments with the risk of an election following an extension increasing
- UK-EU talks not looking good despite EU announcing otherwise
Stavros Tousios
Head of Investment Research
Orbex
This analysis is provided as general market commentary and does not constitute investment advice
Primary and secondary Stop-Loss: Using leverage safelyThis is a way to safely trade highly leveraged products employing primary and secondary stop-losses.
ORBEX: EURUSD, USDJPY - The Risks Of A US-EU TradewarIn today's #marketinsights video recording I analyse #EURUSD and #USDJPY
#EURUSD weak on:
- US-EU potential trade conflict (airbus illegal state aid - WTO depended)
- ECB's Germans board member resignation
Medium-term #Euro led flows will hang on Lagarde's policy. A potential transition to fiscal tools will be euro positive
#USDJPY strong on:
- Dovish Evans turned neutral
- Positive home sales
- No GDP revision
- No safe-haven flows
- Dollar seen as risk positive
Stavros Tousios
Head of Investment Research
Orbex
This analysis is provided as general market commentary and does not constitute investment advice
MSFT : Careful on the price action within the next weeksHope this idea will inspire some of you !
Don't forget to hit the like/follow button if you feel like this post deserves it ;)
That's the best way to support me and help pushing this content to other users.
Kindly,
Phil
DJI / DOW JONES / us30 -- long term short emerging -- multi-weekanother cycle of "sell in May and go away" with Sept / Oct being the worst of the returns that make this axiom a solid and trustworthy one. Ichimoku Cloud and RSI divergences support this idea too.
Risk seems to be peaking, and Risk/Reward is now well within acceptable ranges with SL1, SL2, and SL3 positioned wisely.
Going into the autumn seasons when traders return, recession calls growing ever louder, trade / tariff tensions rising, war hawks calling more strongly when global growth is waning... this is a cocktail for 25% to 40% equity corrections.
SL1 = 26500
SL2 = 27100
SL3 = 27600
TP1 = 24700
TP2 = 21900
TP3 = 20600
