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🚨🚨🚨 Risk Management and Position Sizing

Say you wanna long BTC for a 1:3RR trade, your portfolio is $10,000 and you wanna just risk 1% of your account.

🔴 Step 1: Determine the Risk Amount

Risk Amount = 1% of $10,000Risk Amount = $100

🔴 Step 2: Check the Stop Loss (SL) Percentage

In the chart below, SL is 2.5%

🔴 Step 3: Calculate Position Size

Formula: (Risk Amount / SL %) * 100Example:Risk Amount = $100SL % = 2.5%Calculation: $100 / 2.5 = 40$40 * 100 = $4,000

Therefore, $4,000 is your position size. Now take a position worth $4,000. You can either go $40 on 100x leverage or $400 on 10x leverage.

🔴 Cross-Check Validity via Calculating Drawdown and Gain

Example: You took $40 on 100x leverage

2.5% Loss Calculation:

$40 (initial margin) * -250% = $100 Loss

7.5% Gain Calculation:

$40 (initial margin) * +750% = $300 Gain

Think of taking trades as putting in $1 and taking out $3. This will make you a profitable trader.

🔴 Key Takeaway

Position sizing is one of the most important aspects when it comes to futures trading. Never randomly jump into a trade; always calculate position sizing and risk.

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