11. 风险管理 -Risk Management
What is the importance of risk management? Risk management is crucial to any trading strategy or style as a trader can be profit able if he White out within a string of a few bad trains. You need to protect your capital because that is what insurance, your survival and ability to bouncer back regard list of the bad week, month, year that have. First question, how big should your trading account be? What can say with certain deep is, don't put all your money into your trading account. It should be large enough to hurt if you lose your entire account, but not enough to lead you to financial. The table above shows how much profit is neethling to recover your loss during a drawn. Therapy. It's important to cut your loss. Risk to report RR. This ratio de notes, how much money you make on a successful trade versus how much money you lose, being unsatisfied on the same trade. Let's take an example. You buy a stock for one hundred dollars. You have a target of two hundred dollars and a stop loss of fifty dollars. What is your slash are for this trade? Our slash or equal one hundred to fifty half awards, slash two hundred to one hundred, equal in two. Let's take an example to analyze success right now. You task a coin ten times and get tales and heads fifty percent of the time individual. You make five dollars every time its heads correctamente and lose it on every test. Here, the art, our ratio is dollar five, slash dollar five, equal one to one. You also know that your success rate is fifty percent as we get had fifty percent of the time. At the end of ten, tossa pnl equal twenty five dollars when twenty five dollars lost equal zero dollars. Let's say that you now get heads sixteen percent of the time with same conditions. At the end of ten, tossa pnl equal thirty dollars when a twenty dollars lost equal ten dollars. Now if you retire the original success rate but make ten dollars on every heads inside of five, your new york arabia is dollar five slash dollar ten equal. At the end of ten, horses, pnl equal fifty dollars, win twenty five dollars, lost equal twenty five dollars. At the end of one thousand tassos pnl equal five thousand dollars when two thousand five hundred dollars plus equal two thousand five hundred dollars. Thursday, you notice that the RRratio on your trading is just as significant as. Success rate. And they are. Many successful traders are successful. Fifty to sixteen percent of the time, but still make huge profits over hundreds of traders due to risk management and are ratio. Balancín are our ratio and success rates。
The following chart shows the air arabia visual, he and explaya what success rate is required to remain at break even. Statistics for different are set up. Now the most frequency question is how much to risk portrait. Most traders agreed that you shoulders risk more than two to five percent of your total account baLance per. Allow, this is not incorrecto. It is considerablemente more complicated. Let's imagine you have fifty thousand dollars and have had a run of six losantos in a row. If you think having six losantos in a role is improbable, consider this table, which indicator the possibilitat of having consecutiva lossio based on the strategies percent. This chart shows the importance of risk management. Even if you have a sixteen percent. Win rate, there will come a time when you have five consecutiva losing trade. You need to survive those with enough capital to not be affect it. And that is how you calculate position, size and risk portrait. Note. My personal preference is two to three percent risk per trade as mostly scout and the number of traders per month is high. Position size in. How much should you personalmente enter a trade with? First, you must understand that capital preservativo is key, and with your success rate and you should be able to survive any losing streak with a probabilidad of greater than twenty percent. Now you must understand that when we talk about three percent risk, you don't open a position with three percent of your account inside. If you take a loss on that trade, then you lose three percent of the account. To enter the trade with this condition in mind, you need to understand what position size means. Many authors, suggs, one percent per trade, but let's stick to three percent for this example. Three percent is the amount of risk you're taking on. Your position size will depend on where the invalidación level is。
To reiteradamente, let's say, you have one hundred thousand dollars and choose to risk three percent. That's three k dollars. If you are risks in three k and your invalidación is four percent below your entry，then your position size is sevres. If you want to trade with a position size of sevres five K. You can eiffel buy or short using seveso y five k without levert, or you could use, for example, five ex levert and use is margen. We will only lose three percent in the state of sevres to eighty percent. And still trade with such A. Big position, size. Example. This is a recent trade took on dollar E, T, H. Reasons, volume profile analysis plus range play plus confidence of order book for the horizontal levels marked it. They are abstract it to focus on stop lost place and entry. For example, let's say, our trading capital is one hundred k dollars. We want to risk a maximum of three percent in each trade e three thousand dollars. The position size is to find as below. Risk amount divided by invalidación distance in percentatge。
Henson, the straight we can trade with one hundred key worth of position size by only risk three k dollars. S. L, stop loss at three percent dash from sharp. Total capital equal one hundred K. Capital to risk equal three. Position size equal three kate slash distance to S. Trading trident. This is something that took about before and still emphasis to this day. In this section, we will learn to put together all aspects of risk management. That we've learn so far. One should only enter a trade if you have a clear trading, trading. One entry trigger as prior trading technique. Two, establish and validación levels stop loss。
Three, define reverse sales profit taking. Entry trigger. A slash or flip confirm with horizontal range levels. Request of previous range psc after breakdown. These are just samples that you need to define with your strategy. Stop loss. The Price in the opposition direction of the trade where the trade is exiten at a loss. At this level, the reason for the entry becomes invalidación accord to T，A, and the Price can then move in the opposition direction probabilidades. Target. It is the possible Price level that the assets may touch based on previous trends or influence and where a possible reversor could occupy. Target is the next path of least resistance from where the Price may reverse. We will always only use TAto determine all three. Implementación active risk management。
Let's take a simple example of active risk management. Theorin theorin, you know, know everything you need to know about decision risk portrait. What about taking gradual profits or getting out of a trade early? It's not always as simple as playing your stop loss and forget about it. Learn a lot about this aspect of trading from tom, donte. Example. Let's say, we want to short a three touch level. We expects to act as resistance and miss the target by a few percent. We did not take profit, and now the Price went above entry, but did not hit stop los. We notice how the Price react sharp lead to the level fliping support. Now our original trade idea of shooting resistance has been invalidación。
So we get out without taking the full loss. Just remember that having a fixed stop loss does not mean you take the full of the time. You get out when your idea has been proven wrong. Evolve R. The concept of evolve are was popularis to perhaps everyone by trader daunte. When they are in profit and want to bank it as fast as possible, northeast traders are terrible. And when they are in the red, they are hopes full, unreal ice loss makes them hope that the trade still works out. You want to do the inverse of amateur. The psychology is quite crucial for trade management. Consider this sample trade. In these scene areas, traders moved their stop to entry and then sit on their hands hopp for one. The thinking is that it is a free trade now. Evolve in our is a concept that explaya that your risk report ratio is always changing when you're in a position. Evolve in our is visualizado. For. Europe six percent after risk in two percent on the trade, and you are now risk that six percent to make two percent. This is when you place a market order and then exit the trade with a large profit. Beyond the entry gold and stop loss, there is a certain degree of planning that goes into making a trade. The evolve innocent does not implica that you should accept all your trade as soon as you make a small profit. When the trade means to be slowly reverse on you and the evolve in r is less than zero point five. That's when you start to consider an early exit and secure profits. Not having a fixed stop, advanced and risk. You must have a fixed stop loss at any cost. This makes sense for beginners who need to stay away from high levert and blow in up the counts. But as you venture deepak into trading, you will reAlice that sometimes it is not in the best interest to do that. Stop loss orders will exit a trade at a pre determine Price once that Price level is reach, your trade will be realizado at a loss. This frequency results in situation like this. In these situacions, you may want to have a mental stop loss that have said candle clothes below the S, F, P. Candle, then will take. So you can place a fixed up here, and it makes sense to not do so. How do you handle such situation? We make use of trader dantas atr technique. ATRtrick for playing stocks when trading in SF. Use this in addition to the S. FPtutorial. Link HTTPSegg slash tea of me, slash emperor to TAslash four, nine, three. In chapi Price action, we sometimes must wait for a sweep of a sweep, sort of like a three tap and cant enter because we may just get wicked out and obviously can have a manual stop because we can position size accord to me. So we can use the atr to have a safety. Setting needs to be modificar to twenty four. But just look at the atr value of the sweet candle and then place your stop that much above the high slash law. This way, you can position size property. If a candle closed is above your S, FPhigh, of course you close manual, but this is the option to not get stopper out on that one extra sweep, while also having fixed in validación。
Thank you for reading. Hope this pdf helms you in understanding the following aspects of trading. One risk management and its importance. Two calculators of position, size and understanding that levert is not important over it. Three importance of stop loss and the trading trading. For how to effective place a stop loss and calculate position size when trading a sps. Five went to get out of a trade before your stop. Loss is hit and capital preservativo. If any doubt remains, you can comment about it on the tweet and will answer. This is the first pdf of a new series, and we will continue to add on to the series content that will help any trader, master bitcoin trading from basics to order flow. Love. Emperor BTC.