How I manage the order volume?
I often trade Futures, where I can take advantage of leverage to optimize profits. But at first, I didn't know what was a reasonable amount to enter an order with. I know my maximum is 10% of my capital as I shared in the prev post. But when calculating with leverage, it made me quite confused at first.
Try the following example.
Suppose, I have 200USDT capital. I will enter 1 order, with a STOPLOSS level of 0.2%
So each of my orders will be a maximum of 20USDT (ie 10% of total capital)
And my maximum risk tolerance would be when I lose 25% of my money on a trade. That is 5USDT.
Because the volume you place on the order is constant (certainly 10% of capital), so it is necessary to change the leverage to achieve the maximum loss tolerance, how do you calculate the leverage?
Here's my way: 20*(25/0.2) = 2500x
2500x leverage? I certainly never had that much leverage lol.
The problem appeared when the calculated leverage was too large. So what now when the max leverage is only 100x (I assume so, realistically is that there are many exchanges with higher leverage.)
I will take the actual leverage needed when I use 10% of capital (here 2500x) and divide it by the available leverage (here 100x).
So the actual volume needed to use with 100x leverage and achieve the stop loss condition when losing 25% of the amount on 1 order and the actual stop loss is 0.2% is:
In short, to calculate actual volume and leverage, I will calculate according to this formula:
That's it, I hope the way I share can help you, this is the way I am using, very effective. You can comment below, I will try to answer.
Enjoy
DYOR
I often trade Futures, where I can take advantage of leverage to optimize profits. But at first, I didn't know what was a reasonable amount to enter an order with. I know my maximum is 10% of my capital as I shared in the prev post. But when calculating with leverage, it made me quite confused at first.
Try the following example.
Suppose, I have 200USDT capital. I will enter 1 order, with a STOPLOSS level of 0.2%
So each of my orders will be a maximum of 20USDT (ie 10% of total capital)
And my maximum risk tolerance would be when I lose 25% of my money on a trade. That is 5USDT.
Because the volume you place on the order is constant (certainly 10% of capital), so it is necessary to change the leverage to achieve the maximum loss tolerance, how do you calculate the leverage?
Here's my way: 20*(25/0.2) = 2500x
2500x leverage? I certainly never had that much leverage lol.
The problem appeared when the calculated leverage was too large. So what now when the max leverage is only 100x (I assume so, realistically is that there are many exchanges with higher leverage.)
I will take the actual leverage needed when I use 10% of capital (here 2500x) and divide it by the available leverage (here 100x).
So the actual volume needed to use with 100x leverage and achieve the stop loss condition when losing 25% of the amount on 1 order and the actual stop loss is 0.2% is:
20*(25/0.2)/100 = 25USDTYou can enter an order with 25USDT, you will lose 5USDT (2.5% of total capital) when stoploss
In short, to calculate actual volume and leverage, I will calculate according to this formula:
A = 10% of total capital
B = Maximum risk tolerance (I usually take 30%)
C = Actual STOPLOSS Level
D = Maximum Leverage
Actual volume = A*(B/C)/D
That's it, I hope the way I share can help you, this is the way I am using, very effective. You can comment below, I will try to answer.
Enjoy
DYOR
