Thread by @Mikcoin1

#BTC #Bitcoin #Ethereum #ETH #Crypto #cryptotrading #altcoin

I will tell you the first thing you need to know be a profitable trader, "the risk management".

How you do that? How do you trade with leverage? I will explain as simple as possible

#BTC #Bitcoin

The rule is you will not risk more than %1-4 of your trading portfolio "per trade". What that means?

Let's say you have $10000 worth of trading account. That means you got to risk at most $100-400 per trade, but how you do that?

#BTC #Bitcoin

When you leverage trade, you "need to" put a stoploss just when you open a trade. When the things got dirty and your stoploss is triggered, you need to lose maximum of %1-4 depending on the market situation. I will explain with numbers;

Your trading account worth: $10000
You wanna trade "x" coin trading for: $10
Your stoploss is at: $9

That means you will lose $1 per "x" coin you bought if sl is triggered.

Risk you wanna take: Let's say %2

$10000x (%2)= $200

Means you buy 200 "x" coin for that trade.

This is the risk you wanna take "per trade", doesn't mean your total market exposure. I prefer to risk at most %10 of my portfolio in a "bull market", means i can open 5 trades with %2 risk or 10 trades with %1 risk or two trades with %4, one trade with %2.

Some situations you might wanna risk %10 for just 1 trade which i don't recommend but what matters the most is your "total market exposure". As i said i'm on the risky side and risk %10 in a bull market, when things are not clear i reduce my exposure to as low as %3 total.

This is what you need to know first if you are trading with leverage. The second most important thing is where to put your stoploss order for successful results, well you need to learn the market structure and "Elliott Wave Theory" for doing this right.

As an FAQ, the leverage you use doesn't really matter with the risk management rules. Either you use x100 leverage or x3 leverage, triggering of your stoploss should make you lose at most %1-4 of your portfolio.

I should also explain how that is gonna make you profittable. Let's say you got "x" coin for $10, your stoploss is at $9 and your target is at $12. That trade will make you earn $2 if succeeds and make you lose $1 if fails, which makes it a 2R trade.

Statistically that means even if you just win "%40" of your trades which means 4 trades in 10, you will earn $8 from these trades. Another 6 trades that lost will make you lose $6, which will result as $2 of profit with $20 total worth of trade even with %40 win rate.

So another important point for being successful is choosing a good trade. You thinking about opening a trade with 1:1 win:lose rate? Just stay away. You gonna risk $1 for $5 of profit? That is helluwa good trade, just take it and it is almost impossible to lose money that way.

To be more clear, when you open a trade, your take profit target should be further away than where your stoploss is.

To sum up:

Good trade + Risk Management: Certain Win. Period.