This article would not have been published without the help of @The legend zoro 💙
This will be a series of several articles, but this article will generally cover what we will address later in detail:
1. The first principle: Risk ratio.
For any speculation you enter, ask yourself if this speculation is worth the risk or not, at least the profit ratio should be at least double the loss ratio.
For example, if you are going to lose $100, it is essential that the profit is at least $200 before you enter the speculation.
2. The second principle: Do not enter any speculation thinking only of profit; think about how to preserve your capital.
3. The third principle: Do not risk more than 1% or 3% of your capital in each speculation.
4. The fourth principle: As long as you are in the crypto market, I do not recommend trading on stock market holidays, whether it’s the New York or Chicago Stock Exchange.
And this is because the crypto market at that time is governed by the internal liquidity, which is weak in any case.
5. The fifth principle: Speculation size.
The size of the speculation is calculated with a simple equation .. I hope you focus with me because I put this point at the end of the article because it’s a bit difficult 🤣
Speculation size = Risk ratio × Capital ÷ Difference between entry point and stop loss.
Let’s take an example: Suppose your capital is $1000 and you want to enter a speculation .. The risk ratio, as we defined, is 1% of your capital. So 1% equals $10.
The entry point of the currency is, for example, $2
Stop loss: 1.90
The difference between the entry point and stop loss is 0.10
So, the trade size = 10 ÷ 0.10 and the result will be 100 of this currency .. And this is the maximum loss percentage you can accept.
