How to manage a 100$ account Trading Derivatives On Binance.
đ” Margin Calculated Risk: This risk management system is popular among many traders, especially beginners. They calculate the risk using the stop-loss percentage to determine the appropriate margins and leverage to use on a particular trade.
đą Position Size Risk Management : This refers to the quantity of contracts being bought or sold. Itâs calculated by the exact percentage amount a trader is willing to risk on a particular trade. This risk management system is quite effective.
Letâs delve into the first one:
đŽ Managing a $100 Account Using Margin Calculated Risk:
A trader with a $100 account should risk no more than 15-20% of their account, which is around $15-$20. The rule is to not hit more than 1 stop loss per day.
Letâs assume on your first day you took a trade with 20% of your capital with 10x leverage and a take profit of 150%. Hitting the sSL on that trade will make you lose $20, and hitting your target will make you profit $30. Unfortunately, it hits your stop loss.
On the second day, you have a capital of $80. 20% of it is $16, and you took another trade with the same 10x leverage. This time, you hit a take profit of 150%, earning $24.
On the third day, you have a total capital of $104. You took another trade with 20% ($20.8) and hit a target of 200%, earning $41.8.
On the fourth day, you have a capital of $145.8. You took another trade with 20% ($29) and hit another target of 150%, earning $43.6. By the end of the day, your total capital is $189.4.
On the fifth day, you took another trade with 20% of your capital ($37.8), but unfortunately, it hits your stop loss.
So, overall, you started the week with $100, took 3 winning trades, 2 losing trades, and by the end of the week, you are still in profit with $152, which is a 50% increase of your initial capital.
Thatâs the power of risk management. Itâs not about how many SL you hit, but how often you maintain your risk. I hope this will help, as Iâve seen many people losing money these days.