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#RiskManagement #training #margintrade
Hey, guys,
this is a continuation of the risk management manual. And perhaps this part will help a lot of people to save their money. Before you start trading on margin, you need to prepare for it. And just ask yourself how I am better than other market participants who have been trading every day for years, if you don't have an answer go and learn.
Part 4
Margin trading in simple terms is a loan from the stock exchange, i.e. you borrow money for your transaction from the stock exchange, accordingly, the loan is given at a certain percentage. Therefore, you should use margin trading only when it is profitable for you, as we incur additional expenses for the loan. Besides, there is a risk of liquidation of your entire account by the stock exchange or broker, in case the funds on your account are not enough to secure the loan, it happens when the rule is violated in your trading and STOP LOSS is not set.
I am of the opinion that traders who have 1 year or more of active trading experience should use margin credit.
If you are just starting out, forget about margin trading and work only with spot. For most beginning traders, marginal trading equals loss of deposit.
The advantage of margin trading is that we can open a position of 5000$ from our example using our own funds or using x5 margin leverage using only 1000$ of our own funds.
Stay tuned.
Hey, guys,
this is a continuation of the risk management manual. And perhaps this part will help a lot of people to save their money. Before you start trading on margin, you need to prepare for it. And just ask yourself how I am better than other market participants who have been trading every day for years, if you don't have an answer go and learn.
Part 4
Margin trading in simple terms is a loan from the stock exchange, i.e. you borrow money for your transaction from the stock exchange, accordingly, the loan is given at a certain percentage. Therefore, you should use margin trading only when it is profitable for you, as we incur additional expenses for the loan. Besides, there is a risk of liquidation of your entire account by the stock exchange or broker, in case the funds on your account are not enough to secure the loan, it happens when the rule is violated in your trading and STOP LOSS is not set.
I am of the opinion that traders who have 1 year or more of active trading experience should use margin credit.
If you are just starting out, forget about margin trading and work only with spot. For most beginning traders, marginal trading equals loss of deposit.
The advantage of margin trading is that we can open a position of 5000$ from our example using our own funds or using x5 margin leverage using only 1000$ of our own funds.
Stay tuned.
#RiskManagement #moneymanagement
Hey, guys,
this is a continuation of the risk management tutorial.
Part 3
STOP LOSS Size.
Most traders follow the strategy of not risking more than 2-5% of their total deposit balance per trade. This means that it is not the size of your position that is equal to 2-5%, but the size of your STOP LOSS that you risk is equal to that amount.
Personally, I use a stop size equal to a specific amount of money, but it should not exceed 2%. It is important to always use one position size and one stop size.
For beginner traders it is appropriate to use a smaller percentage of 0.5%-1%. This way you gain experience in the beginning, and it doesn't matter whether you lose 0.5% or 2%.
According to our example with a deposit size of 10 000$ the stop size is from 200$ per one trade.
It is important to have the same size of stop and position size always regardless of the prospectivity of the deal in our opinion, in this case on a long distance even with 50-60% of successful trades you will trade in the plus.
Position size.
If we decided to open a deal, while observing the risk of 2% of the deposit ie 200$ Now how do we calculate the size of the position on the deal. Let's assume that the cancel of our scenario that is the place where we will get a stop from our entry point is equal to 4% of this value will depend on the size of our position and is determined as follows.
Amount of risk / Distance to STOP LOSS in percent.
In our example - 200$ /4% = 5000$
Stay tuned.
Hey, guys,
this is a continuation of the risk management tutorial.
Part 3
STOP LOSS Size.
Most traders follow the strategy of not risking more than 2-5% of their total deposit balance per trade. This means that it is not the size of your position that is equal to 2-5%, but the size of your STOP LOSS that you risk is equal to that amount.
Personally, I use a stop size equal to a specific amount of money, but it should not exceed 2%. It is important to always use one position size and one stop size.
For beginner traders it is appropriate to use a smaller percentage of 0.5%-1%. This way you gain experience in the beginning, and it doesn't matter whether you lose 0.5% or 2%.
According to our example with a deposit size of 10 000$ the stop size is from 200$ per one trade.
It is important to have the same size of stop and position size always regardless of the prospectivity of the deal in our opinion, in this case on a long distance even with 50-60% of successful trades you will trade in the plus.
Position size.
If we decided to open a deal, while observing the risk of 2% of the deposit ie 200$ Now how do we calculate the size of the position on the deal. Let's assume that the cancel of our scenario that is the place where we will get a stop from our entry point is equal to 4% of this value will depend on the size of our position and is determined as follows.
Amount of risk / Distance to STOP LOSS in percent.
In our example - 200$ /4% = 5000$
Stay tuned.
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