This article will include the use of contracts for calculation. If you are averse to leverage traders, you can consider it carefully before deciding whether to read it.
After discussing the profit-loss ratio, let's discuss how stop-profit and stop-loss should be applied.
Similarly, when you think there will be a reversal at a certain point, you will want to step in and trade.
This article assumes that the handling fee for each transaction is 0.13%.
The contract uses ten times leverage as an example
First, let’s introduce the algorithm of profit expectation.
((1+(Take Profit×Winning Rate))÷(1+((Stop Loss+0.0013)×(1-Winning Rate)))-1)×10(Contract Leverage)
Next, let’s discuss the methods of taking profit and stop loss.
1. Let’s start with the most basic take profit of 2% and stop loss of 1% as an example.
1-1. At this time, we must first give ourselves a rule, for example, the maximum loss in a transaction is 1% of the total capital.
1-1-1. At this time, our leverage is x10, so the stop loss is 1%, so we can only invest 1÷(1%×10)=10% of the funds in each transaction.
1-1-2. At this time, our handling fee for each transaction is 0.13% × 10 × 10% = 0.13%, which is consistent with spot transactions.
1-1-3. At this time, the contract is different from the spot. The unrealized profit and loss displayed by the exchange does not include handling fees, so we must adjust the floating profit - (0.13% × 10 (contract leverage)) to be the actual profit.
1-1-4. After calculation at this time, we will find that the expected value of the transaction will be consistent with the spot price.
We can know here that in fact, if you control your positions well and only do transactions, there is not much difference between contract and spot transactions.