**Risk Management**💫: How to Manage a $100 Account Trading Derivatives on Binance**
1. **Margin Calculated Risk**: This popular risk management strategy, especially among newbies, involves calculating risk using stop-loss percentages to determine the appropriate margins and leverage for a trade.
2. **Position Size Risk Management**: This involves the quantity of contracts being bought or sold, calculated by the exact percentage amount a trader is willing to risk on a trade. This method is highly effective.
Let's start with the first method: managing your $100 account using margin calculated risk.
With a $100 account, you should risk no more than 15-20% of your account per trade, which is around $15-$20, and limit yourself to one stop-loss hit per day.
Assume on your first day, you risk 20% of your capital ($20) with 10x leverage and a take profit of 150%. If you hit your stop loss, you lose $20, but if you hit your target, you profit $30. On this day, you hit your stop loss.
- **Day 1**: Start with $100, risk $20, and lose $20, ending with $80.
On the second day, with $80 capital, you risk 20% ($16) and hit your take profit of 150%, earning $24.
- **Day 2**: Start with $80, risk $16, profit $24, ending with $104.
On the third day, with $104 capital, you risk 20% ($20.8) and hit a target of 200%, earning $41.8.
- **Day 3**: Start with $104, risk $20.8, profit $41.8, ending with $145.8.
On the fourth day, with $145.8 capital, you risk 20% ($29) and hit a target of 150%, earning $43.6.
- **Day 4**: Start with $145.8, risk $29, profit $43.6, ending with $189.4.
On the fifth day, with $189.4 capital, you risk 20% ($37.8) but hit your stop loss, losing $37.8.
- **Day 5**: Start with $189.4, risk $37.8, lose $37.8, ending with $151.6.
Overall, you started the week with $100, made 3 winning trades and 2 losing trades, ending the week with $151.6, a 50% increase in your initial capital.
This demonstrates the power of risk management. It's not about how many stop losses you hit but how consistently you manage your risk. #BinanceTournament #MicroStrategy