✅️Risk management cannot be dealt with in a one-size-fits-all way. It is usually customized to suit everyone's risk appetite, portfolio size, and type of financial instrument traded.*
✅️Risk management is the most important part of trading. If you blow up your account, you will have nothing left to trade and make more profits.*
✅️Suppose you have $10,000 in your portfolio, first decide what percentage of this amount you will allocate to trading. This depends on each individual but usually it is better to diversify into different financial instruments and keep a certain percentage in cash for a rainy day. Even within the trading world, you can choose to allocate different %s in spot transactions, futures, forex, stocks, etc.*
✅️Assuming you have allocated 10% of your portfolio which is equivalent to $1000 to futures trading.*
✅️The number of units of a particular currency that you are buying or selling (by buying or selling short).*
✅️Position size determines your profit and loss for trading, leverage does not. Leverage only determines the amount of margin you wish to maintain to achieve the specified position size.*
✅️The minimum value you place in a trade in order to open that trade and keep it active.*
✅️Position size = $1000 can be achieved with $100 margin with 10x leverage but can also be achieved with $10 margin with 100x leverage. The profit or loss you make depends on the size of the position.*
✅️The margin allocated for each trade should not exceed 1% - 2% of your portfolio for short-term high-leverage trades, and 5-7% for long-term low-leverage trades.*
*Higher leverage = lower margin*
✅️If leverage is between 2x-10x = use 5-7% per trade*
✅️If leverage is between 10x-25x = use 3-5% per trade*
✅️If leverage is between 25x-100x = use 2% per trade*
✅️If leverage is greater than 100x = use 1% for each trade.*
Good luck❤️
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