🎯 Trading is not a game that is all about trading methods but a combination of 3 things:
1️⃣ Capital management
2️⃣ Trading methods
3️⃣ Trading psychology
🚦🚦 Before placing an order, you need to determine 3 factors:
+, Determine the amount of money you can lose in 1 order (1-2% of total Trading account)
+, Have Entry, Stop loss, Take profit
+, Calculate the volume to place an order.
💖 For example: I have a capital of $5000.
Determine 3 factors:
Case 1.
1. Risk of stopping loss of 1 order $50 (1% of account=1R )
2. Long BTC
Entry 10000
Stoploss 1%
Capitalize x100
3. Calculate Volume to enter the order:
Volume = (R/% Stoploss) x 100= (50$/1) x 100= 5000$
So when you are hit by Stoploss, you will lose 50$ (1R)
Case 2:
1. Risk of stopping loss of 1 order $50 (1% of account=1R )
2. Long BTC
Entry 10000
Stoploss 3%
Capitalize x100
3. Calculate Volume to enter the order
Volume = (R/% Stoploss) x 100= ($50/3) x 100= $1666.67
So when you get Stoploss, you will lose 50$ (1R)
Case 3:
1. Risk of cutting loss 1 order $50 (1% of account = 1R )
2. Long BTC
Entry 10000
Stoploss 1%
Leverage x50
3. Calculate Volume to enter the order
Volume = (R/% Stoploss) x 100= ($50/1) x 100= $5000
So when you get Stoploss, you will lose 50$ (1R)
💨 Through the 3 examples above, we can see that Leverage is not really important when trading. Because leverage does not exist in this type of volume calculation formula.
Similar to example 1 and example 3, the only difference is the leverage x100 and x50. But the Volume is 5000$ and when the Stoploss is hit, it loses $50.
Unless you want to play big (exceeding the account risk), you need a large leverage
🔥 Don't place orders without capital management, burning your account is a matter of time. 🔥
