A formula teaches you how to set stop-loss and open positions in the cryptocurrency contract
Important reminder: Be sure to use 10% of the total investment funds to trade contracts!! Total investment funds are not your total assets!!!
You must be very envious of others opening 50x100x positions, right? Do you also fantasize about opening a high leverage position? Do you jump in as soon as the price hits? So how should I open a position and set a stop-loss?
First of all, to survive in the cryptocurrency market, stop-loss is essential; no one wants to experience another liquidation like 818 and 518.
Secondly, while the leverage magnifies profits, it also magnifies losses. Therefore, before opening a position, you must first determine the stop-loss amount, generally calculated as 1-2% of the total contract funds, for example: if the total contract funds are 1000U, then 1000U x 1-2% = 10-20U. This amount is the loss you can bear!!
After confirming the amount you can bear for each order, use the following formula to calculate the position size.
Number of coins x Stop-loss distance = Loss amount
Taking a long position as an example, if my stop-loss amount is 20U and the stop-loss distance is when BTC drops 1000 points from the opening price, then I can open 20/1000 = 0.02 BTC. 0.02 BTC is the amount you can open, and if the stop-loss is triggered, the loss will still be 20U.
From the above formula, it can be seen that the stop-loss amount and the stop-loss distance determine the position size, while the contract leverage does not affect the position size; even if you open at 10000x, my stop-loss amount is still 20U.
Note: Please use the full position mode for high leverage, otherwise -100% will result in liquidation. In full position mode, even with a -1000% change, according to the above formula, my loss amount will always be 20U.
