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Sizing & how to manage riskThe easiest part, if everything's perfect you just trade as much as the market allows before the diminishing returns hit hard. However usually everything is not perfect at the beginning, so continue reading. Logically, in order to operate successfully & continuously (you can't market make much you if loose money aye?), your equity chart should represent a smooth movement from down left to the top right corner. What factors affect an equity chart? 1) Market activity itself; 2) An operation principle (strategy/system); 3) An operator(s). So our potential sizing formula/algorithm should, lol, contain these 3 factors. Makes sense? 1) If market activity is too narrow we increase size, if market activity is too wide we decrease size, otherwise if its normal we don't change anything; 2) After a systemic loss we decrease size, after a systemic profit we increase size, otherwise after a +- breakeven we don't change anything; 3) If there's real confidence about what's coming you increase size, if there are doubts you decrease size, otherwise you don't change anything. Number 3 needs a lil clarification, I didn't say "you're confident/have doubts", I said "there's confidence & there are doubts". It's not only you and quality of your operation, what you also need to feel is whether all of us, as the collective, whether the market itself is confident. And there you can use all the available info, all the other assets, all the non-market data. Understand that we are all the market, you're part of it when you trade. Every1 looks at the same data. The Collective. The Feedback loop. Ok, so how to increase/decrease exactly? First you need to calculate the maximum size. 1) Come up with the maximum tolerated loss in money for one trade (more on that later); 2) Look at the chart and find the maximum distance between the entry & exit-at-loss points; 3) Find out the maximum size that won't allow you to loose more than max tolerated loss in case of passing the distance you've just found out. These numbers should be reevaluated when there's a change. Don't forget that a change can be seasonal, just like volatility on ES futures changes after US open. Imagine you ended up with 70 lots. Divide it by 7 equal chunks. Why 7? Because of number of factors, we had three, 3*2 + 1. So now one chunk is 10 lots. One decrease/increase = 10 lots. Then you start trading at 4 chunks (40 lots) (3 + 1) (this way you got more freedom, you can both increase and decrease after the first trade). Then you just and increase/decrease according to the plan. For example, you made a profitable trade at 4 chunks, and the next level is very tight, so you have 2 systemic increases, so you increase by 2 chunks (20 lots). If you hit zero chunks you make a imaginary trades and then come back to the real account when your size becomes one chunk, if you hit 7 chunks you don't go higher (maybe couple of 8 chunks trades might make sense tho). You're free to fine tune this adjustments live, you can eg see a serious vola increase and decide to decrease by 13-16 contracts instead of 10. Calculating these things precisely won't magically turn a loosing operation into a profitable one, but will make you focus on the wrong thing & steal your energy. Don't calculate, trust yourself & let your brain approximate and feel da thing. Let's come back to the maximum tolerated loss in money. Making it 1% or 2% or 37565476% of deposit doesn't make any sense. First of all, a deposit can be financed externally, with a credit line, with a prop shop etc. You deposit should never be touched, only the risk capital above this deposit. Second, what you care about 4 real is how much risk capital do you have. For example let's say $10k, that's actually a good amount of money. Third you divide the risk capital by 7, and end up with max tolerated loss in money for one trade. No, consecutive loss streaks have nothing to do with coins & binomial distributions, so number 7 is not worse, but better cuz it's simpler. I think 4-5 consecutive losses are "OK", but 10 is too many. P.S.: if you've lost you risk capital/thing ain't going, you just stop, evaluate, fix the problems, test on simulator & start fixing another risk capital, and go again, until the victory!
CME_MINI:ES1!Education
by gorx1
DYDX/USDT futures setupDYDX-USDT futures Hi guys. Well, I have to go to the point very quickly because there is very little time Another one that caught me attention was DYDX here. Well According to the analysis, by breaking the support line (1.629) and observing the stabilization candle, you can open a short position. If the break is done: first tp is 1.596 and the next tp is 1.585 and the next one is 1.572. ELSE take a long position : first TP : 1.698 and after saving the profit second TP : 1.729 Good LUCK Disclaimer: I'm not financial advisors. The content that share on this page are for educational purposes.
by Hr_odin
BTC Long? Position Building Could be wrong here but things are lining up to look like a decent uptrend but I am still bearish most markets and neutral BTC. This is a position building trade for me but can be converted into a pretty good trade for anyone. Levels are there. Additional entries are there as well as good TP. If sideways can always play then back and forth. Please note I am hedging this trade using multiple instruments to mitigate some of the risk. I am long term bullish but still in a bearish mindset due to the global economic situation. That being said bear markets are not all sideways and down. BTC is an inflation hedge and inflation is getting out of control fast. Biden keeps spending and the FED keeps hiking interest rates nothing good can come of it. People could seek out BTC as a safe haven driving price up. If not I will have a great position for the coming cycle and bull run. I might use 3x leverage but only to preserve capital for other things. Can always add to margin and remove the leverage if needed. Not your financial advisor and this is just a basic idea for a trade. #DYOR and don't trade more then you can afford to lose. I am using 3% of my deposit on this trade or 1.5% if I decide to use 3x Leverage. This trade could last a long time for me but the target on there are off the 4HR , 12hr, 1Day and 3 Day TFs . You can see the other lines above if you want to hold it long term as well. Weekly has even more. Doubt we have seen the end of the bear market, I know it doesn't feel like it but never too early to start preparing and to be prepared just in case. Best of luck... I was hesitant to share this as I worry some people will just see it without understanding it completely. If you don't understand what you are looking at then don't trade it. I did make it fairly simple and moved it to TFs from ticks. Please don't jump in this trade with high leverage expecting quick returns this is not the trade for it. Many things went into this trade setup. TP1 will be fairly easy but could easily reverse to other entries after or anytime during. I am not worried unless it goes below 14k and even then the options will cover loss and can hedge any big reversals with opposite futures either on a different exchange or some let you long and short on the same in hedge mode. However, that technically isn't hedging.. Suggest you find an instrument you know and use it as a hedge. Options work great. There are many great ways to protect your capital.
BITFINEX:BTCUSDLong
by Z3R0-G3N3S1S
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