#StopLossStrategies - I present to you a practical example of correct trading. For instance, I decided to enter a buy trade for Bitcoin at a price of $84,644.2 after analysis indicating an upward trend.
Setting a Stop Loss
- To avoid a significant loss, we place a "stop loss" order below a strong support level. Let's assume that the nearest strong support is $84,144.2.
- Here, you will risk **$500** per unit (the difference between the entry price and the stop loss: 84,644.2 - 84,144.2).
Determining a Take Profit Target
- To calculate the target, use a reward/risk ratio of at least **1:2**.
- In this example, we apply a ratio of **1:3**, so the target will be:
84,644.2 + (3 \times 500) = $86,144.2
- The expected profit per unit: **$1,500** (86,144.2 - 84,644.2).
Trade Size
- Do not risk more than 2% of your capital in the trade. If your capital is $10,000, the maximum risk is $200.
- The number of units you can buy:
frac{200}{500} = 0.4 units
Potential Scenarios:
- If the price drops to $84,144.2:
- The trade closes automatically, and the loss = \(0.4 \times 500 = $200\) (which is 2% of the capital, protecting it from larger losses).
- If the price rises to $86,144.2:
- The trade closes automatically, and the profit = (0.4 \times 1,500 = $600).
