About Sizing, RM & exposure:
MUST READ FOR EVERYONE:
Since we have new comers to TradingABCD, or to Crypto trading in general, also it was a while since we mentioned this, let’s all remember some key and basics, I will write brief direct words:
1- RM:
aka, risk management, this includes 4 parts
A) using Stop loss, this is a MUST when trading, hard or soft, when you are wrong or when your trade idea is invalidated, simply close the position, don’t over complicate things where u end up slowly sinking more and more
B) use position size calculator
C) distribute your risk by not putting all eggs in one basket, I use Binance Phemex Bitget combination, if any got hacked/down/bankrupt, I survive
Registration links for these world-class top trading platforms (we earn Ref if you used our links and it costs you nothing, we also kickback half of these fees to our existing members)
Binance with 25% fees discount/kickback: Registration Link
Bitget with Spot fees-free and Futures kick-back fees program in TradingABCD : Registration Link
Phemex with Fees Discount & kick-back fees program in TradingABCD : Registration Link
D) knowing your R:
R is the amount of money that you can and you accept to lose in a single trade when you are wrong which is very normal in Trading, typically R should be 1~3% of your cap size, I usually give signals with 3~4 R:R means if we are right we make 3-4Rs if we are wrong we lose 1R, and in all cases once we get 1TP or 2TPs filled, I am adjusting SL to avoid full R Loss and maintain profitability in case of any sudden major pullback
Going with small R makes your trading worthless, going with Big R makes your trading risky , stick to the range of 1-3% then you are oke to grow steadily and gradually
normally a 100K trading cap should risk 1-3k per trade, risk is R not the entire trade size
2- Sizing:
Position size can never be same for all trades
position size is mainly related to your SL (Stop Loss) distance from your entry, to make things easier I provided you with position size calculator in our group ( TradingABCD.Net )
you can never go with equal size in every trade, X-trade has SL 10% far from entry and Y-trades has SL 2% far from entry, the position size of X trade must be 5 times smaller than Y trade
also Y trade must have 5 times bigger size than X trade, otherwise it became worthless, random or over-risky
Example: our last ZRX, WAVES or BNB trades where SL is tight Vs. RLC or TKO Trades where SL is wide:
in BNB and ZRX, we had SL far 2.5-3.5% from entry, here you go with 40-50% of your cap and you still maintain the R rule
while other trades had 9-12% SL far from entry, here you go with ~10-15% of your cap size to maintain the R rule
going too small in the first case makes it worthless trade, and going too big in the 2nd type of trades makes it too risky , going same size in both is wrong also cuz u make less money in trades like bnb and zrx while u lose big if trades like TKO or RLC got invalidated
examples of these trade setups we were discussing: just examples, don’t copy if you didn’t take the trades with me in the group on the time of issuing.
Waves
3- Leverage:
Can I use leverage for your signals or my own trades?
the answer is Yes and NO:
NO if you don’t know what you are doing, YES if you know what you are doing
when you use leverage, you need to know the following:
-position size calculator works for both spot and leverage when u get the result as a # of tokens/shares
Example:
The position size calculator told u to buy 50 bnb, then your position size is 50bnb, if u use spot u buy 50bnb X 300$ = 15000$
also u can use X3 leverage for the same setup, you also long 50bnb but in this case you use 5000$ as a collateral, your risk will still be the same and your R and your planned loss or planned profit
So, when using leverage:
1- make sure the position size as # of Tokens is the same when u use spot, otherwise u r over-risking
2- make sure you don’t use high leverage when SL is wide
3- in all cases, make sure you have hard Stop, even if u went with super small position, cuz stop near liquidation is still cheaper than liquidation (exchanges are charging liquidation fees and insurance fees and ….)
4- Overall Exposure:
in Forex, we trade Euro, pound or dollar, or JPY, they are not so correlated pairs, but since crypto market, the entire market is following btcusd, then it become more risky if you hold many positions in the same time
for this reason, I follow this rule: I don’t hold more than 3 fresh positions in the same time
means, if I open 3 trades, then I don’t open the 4th one till I get TP hit and SL adjusted in one of the ongoing positions, I make sure that in case of any sudden/big correction, I don’t lose more than 3R combined which is somewhere between 3-5% of my total cap when market is normal (not super bullish and not super bearish)
otherwise, u make money when market goes up and u gave back most of your profits at the very first pull-back
Related & Useful links:
Feras Link Tree: https://linktr.ee/FerasY1