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Position Size Calculation - Example 11. INPUT PE = Capital($) = 1000 RP = Risk (%) = 2 % EP = Entry Price = 1719.78 XP = Exit Price = 1733.75 2. OUTPUT (Goal) PS = Position Size = ? LEV = Leverage = ? IM = Initial Margin = ? 3. CALCULATION RD = Risk ($) = 1000 * (0.02) = 20 SLD = |EP - XP| = |1719.78 - 1733.75| = 13.97 SLP = Stop Loss (%) = (SLD / EP) = (13.97 / 1719.78) = 0.0081 PS = Position Size ($) = RD / SLP = 20 / 0.0081 = 2469.13 CPV = Current Price Value = EP = 1719.78 QNT = Quantity = PS / CPV = 2469.13 / 1719.78 = Roundup(1.435) = 2 4. Assumption and Final Calculation LEV = {3, 5, 10, 20} IM = PS / LEV = 2469.13 / {3, 5, 10, 20} = {823.04, 493.826, 246.913, 123.4565}
BINANCE:ETHUSD.PEducation
by yaser_rahmati
Risks of Defi platforms?You have to transfer your assets to their system to lend or staking to get attractive rewards. Problem: you lose all control of your assets and they can use your assets for illegal purposes or when their system is hacked you will lose all your assets or they can prevent you from pulling your assets out of their system. You should stay away from such forms of defi. Do not hand over all assets to someone else to manage, no matter who that person is or any organization. The recent collapse of some defi platforms can be a very sophisticated form of fraud, stealing customers' assets and blaming the market and no one has to be punished by law.
by aromB
EXIT STRATEGIES: Money ManagementHey traders, Today I wanted to dive into exit strategies. A lot of you will already have a very clear understanding of what an exit strategy is and how you usually go about it. Most of you are probably automatically thinking of stop losses and take profits, which is fair enough. Today however, I wanted to dive into some more advanced techniques. I want to have a look at what you need to be thinking about prior to entering a trade, during the trade, and then finally when it's time to get out. Yes, we use stop losses. Yes, we use take profits. But I know from my experience personally, it's very rare that I actually get my full stop loss hit. I'm usually out of the position prior to those levels. This all falls under money management, which is by far the most important aspect of your trading ability that you need to understand. We are money managers as traders. When we are risk on, we have money live in the markets. It is our job to manage it accordingly. Win or lose, the success comes down to if we are managing position and risk correctly. Now, this blog is a little bit more directed to our day traders or people who are constantly having positions with the whole idea of set stop losses and take profits. For investors, it does differ a little bit and I'll touch on that now. When it comes to buying a stuck or an asset, it is very easy come up with a trade idea. You find the idea, you buy, simple. What makes it really difficult is actually finding the appropriate time to sell. That's what actually makes the good investors. Because equity, yes, it is still extra cash in your pocket, but you don't get that cash actually in your pocket until you have hit that sold button and realized your profits. My biggest outlay to anyone in any type of investing is have an exit plan prior to entry. Have a minimum requirement, have a maximum requirement, and what to do in those scenarios. I've seen it many many times before, especially with the recent cryptocurrency boom that people just get in expecting it to go up with no exit strategy, so they never exit because it's constantly moving up. Then, Unsurprisingly, the market pulls it back in and they lose all of their equity profit. They find themselves trying to close out of their position before it's a big loss. Always have an exit plan. Now lets dive back into more of the day trading market. When it comes down to exits of the market. Most people use stop loss orders or take profit orders. These are orders you can set on your brokerage platform, which essentially, when that asset reaches a certain price, the server will read that and automatically pull your position at your requested price. These are the most common ways to manage risk. It's a very beginner friendly. It's very easy to find an area where to put your stop loss, put your stop loss, put your take profit, walk away and let the trade unfold. However, today, let's get a little bit more advanced. There are a few questions you need to ask yourself prior to entering a position. Regardless of looking at the profit potential (which is the biggest pull). Start associating yourself with the risk you are taking in order to open this position. The first question I want you to ask yourself is, how much are you willing to risk on this trade? Risk is an important factor when investing right to determine your risk level. You need to understand what is not going to affect or hurt you, but still generate enough profits to make it worthwhile in your eyes. Finding that medium balance of what you can handle when you go and drawdowns is going to be highly beneficial to risk the right amount and not go emotionally insane every time you're in a position. Once you understand what dollar value you're willing to risk, then you just position size accordingly and have a stop loss on your chart and there you will know your maximum risk. That is what you are going to lose if all goes against you on this position. Once you have the basic understanding of how much you're risking per position, you want to try and avoid hitting that stop loss at all costs. So while you're managing your position (this is something I like to do personally) if everything is going against you, it's usually a sign that it's going to continue that way. Yes, statistically, there's going to be sometimes it may be reverses. That's the beauty in backtesting your strategy so you have an in-depth understanding on what it is capable of. I look to start scaling out of my position, which means selling off my position size as we move towards the stop loss. As I mentioned above, it's very rare that I actually hit my Max loss stop loss statistically. Looking back at my journal, I've actually scaled more than 75% of my position out prior to hitting a full stop loss if not all of the position. This is giving me an incredible advantage when it comes down to statistics, because while I can still hit a full take profit and a full position in profits. But I am not hitting a full loss, so my risk to reward has actually rapidly increased, even though it's still very similar when I'm entering the trade. The second question I want you to ask yourself is, where do you want to get out? Where is your take profit? Where is your stop loss? But also look within those areas where realistically are key indications on where this price is going to move. Do you have to get through four or five support levels to reach your take profit? Should you start looking at scaling out some of the position in the profits around those levels? The more you have to go through, the harder it is going to be to actually achieve the profit. Have an exit plan. Where are the levels you want out? And finally, and this is probably the biggest one, how long you are planning on being in the trade? If you're trading down on the five minute chart, do you really want to hold this trade for two days? If it takes that long, do you only want to be trading during this market hours? Where do you want to cut this trade? This is really important because most people, especially the set and forget traders, they don't have a time limit on their trades. They allow it to just run over multiple sessions. But The thing is, the longer it runs, the less than analysis becomes true. Have a look at the time frame you're trading. If you're investing, look at the yearly outlook. How long do you really want to be holding this stock before it actually does something? I know we're not options traders. Some of you, maybe, but it is a good idea to have kind of a time scheme that you don't want to be holding any longer than. I personally look to start scaling out of the position, taking risk off the longer the trade takes, especially if I'm trying to trade on volatility. These are three questions to ask yourself and a little bit of tips and tricks when it comes down to scaling an managing risk on a more advanced level. Remember, as traders and investors, we are risk managers. We are money management specialists. Our job is to not lose money. When we stop losing money, profits will come in. Focus on your risk, focus on what you can afford to lose, and then focus on your positions and try and stop yourself from ever hitting that Max stop loss that you give yourself. I wish you all success! -Jordon Mellor
Education
by the5erstrading
8
#gameplan P3N Low-Risk Setup:Risk management is very crucial when you trade. Here is one of my mostly applied strategies for risk management. It's useful for people who trade in a very volatile market or fade. This method aims to limit the loss to zero by taking profit when reaching 1R. It's with less profit than expectation, but lower the risk. 1. Open the position and set how much $ you're going to risk for this gameplan. Then set the partial TP at the 1R and xR levels. (xR is your target.) 2. When price reaches 1R, it TP 1/2 position to keep the small profit. 3. If the trend is against our expectation and have a down move to -1R, at which our stop loss is, we close the position with 1/2 of the original with the same amount of loss as the profit. So this will keep our trade safe. However, if it goes up to 5R, which is out target, we can still keep 1/2 of our position to take the profit. Tips: You can use Fibonacci tools to predict how many xR in your gameplan.
by p3nchan
2
Eurostoxx Ultimate Pivot PointsReading charts is just one part of trading a bear market, another highly significant part is a solid understanding of market psychology, heuristics and biases. Having spent 14 years in a QE fuelled bull market where there were few inexplicable events and certainly no major forced liquidation events, it is easy to understand why so many participants get so excited about two days of asset flows out of commodities and into tech names. Yes, the market can go higher from here, yes it can go lower, but calling a major bottom and repeatedly getting attached to these short squeezes is all part of the psychological conditioning that has been happening to many over the last 14 years. Therefore we would suggest waiting for extremes where there is nobody else left to buy or sell, this is where the odds are stacked firmly in one's favour. Patience. Discipline. And more patience.
TVC:SX5E
by Newcomb_Analytics
How close SPY bottom? Are we close to the equity bottom or it just started its way down? in the last financial crisis/bubble Spy pulled back from the heights over 50%, at the moment we are still siting at around -23% . So if we will repeat history movies then we should find a bottom at around 233 right where 2018-2019 bottom was. worth to mention that each time when SPY dropped over -30% from top we had a recession. Let's hope that this time history will not repeat it self and SPY will find support at 200EMA. Trade safe and cut loses short. AMEX:SPY
AMEX:SPY
by linkolnas13
2