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Position Sizing Your Crypto Trades

08/01/2018 08:10


 

Notes:

Do not risk more than 1% of your entire portfolio on a trade. There are times when you can be flexible, but the general rule is to stick to the 1% guidline.

Never be under pressure when you are in a position. Keep your emotions under control and don't force a trade.  If you ever feel like you are trying to rationalize a trade, STOP.  This is when you can get into danger and start accumulating serious losses.

Example of calculating risk amount to buy based on total portfolio size:  Entry level of $7,500 in a $100k account and you want to risk no more than 1% (100,000 * .01 = 1,000) You decide that $7,000 is your stop loss level.  In that case you have 500 points of risk (500 dollars)  You divide your risk by the margin of your stop loss level and that determines how many Bitcoin you can buy.  In this example we decide to buy two Bitcoin.

 

Short time trading within a larger position:

10EMA on a four hour chart (H4 chart). You can trade multiple positions inside of your core position.

Key is to find a trend move up or down and trade with it as it gives your flags and pennants.

No change on stop loss procedure – maintain 1% or 0.5%.  You should maintain consistency on all of your trades regardless of time frame. Only difference is the time which you exit trades.

 

Resources:

This chart shows how many consecutive losing trades it would take to get down to $2,000 from $100k based on the % risk you take based on a $100k account.

This is a general rule to use, but it not set in stone.  It is certainly something to keep in the forefront of your mind.

 

 

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