🔥🔥🔥 Risk management formula from Associate Professor, PhD. Vo Dinh Tri, fellow traders, please read more in the article.

There are two quite important indicators: position size and expected value.1. Position size means the maximum amount of money to place an order. This depends on the highest level of risk tolerance, which is how much % you can lose per trade. For example, if you take 100 million to trade and bear a maximum loss of 2%, the risk is 2 million. Then divide this amount by the stop loss percentage to get the position size. For example, if the stop is 10%, the position size will be 2 million/10% = 20 million. So if you are unlucky, place an order of 20 million, stop loss of 10%, you will lose exactly 2 million, which is the acceptable risk level for that trade. If you stop loss is 20%, then position size will be 2 million/20% = 10 million. Unfortunately, I hit a stop loss of 20% and lost exactly 2 million, exactly as planned.2. Expected value: Expectation = (probability of winning x level of winning) - (probability of losing x level of losing). For example, the probability of winning is 40%, the average winning level is 20%, the average losing level is 10% (with stop loss), position size is 20 million, the expected effect will be: (40% x 4 million) - (60% x 2 million) = 0.4 million (2%) or (40% x 20%) - (60 % x 10%) = 2% Note that this is 2% on position size 20 million, with 2% risk and 10% stop loss of total capital of 100 million. This is an optimistic assumption, what method do you traders often use and If there is a better way, please share in the comments!