Error in Calculating the Risk Margin in Trading Derivatives This Mistake Is Always Made By Crypto Traders!
Margin risk is the most crucial thing in the world of trading, especially derivative trading, in particular Crypto derivatives.
In the past 3 years, I have seen these mistakes continue in the pet industry and be taught in the crypto trading community.
Let me give an example.
Lev 20 margin 5%
Lev 25 margin 4%
Lev 50 margin 2%
Lev 100/125 margin 1%
Example: $100 Lev 50X margin is enough for 2% of the total balance of $2.
Of course, I’m sure friends have seen the quotations above on how to manage trading risks.
But it’s actually a big mistake in trading risk management.
Let me explain how to mathematically settle risk trading correctly and accurately so that it is not a repeated mistake by crypto traders.
I used the above example using Lev 50x and a margin of $2 from my total balance of $100.
The damn loss I would get was $13 more, and that was more than 13% of the total balance I had. Isn’t that a fatal mistake?
If you notice that I’m a fox here, the size of the margin becomes smaller.
What is surprising is the risk of my loss turning into $2, and I risked only 2% of my total trading balance when using the parable above.
Well, what becomes the problem is when the concept in the beginning continues to be used, then any technical analysis is used.
So when hit by a stop loss, the losses can be much larger, and it will make the beginner crypto trader poor quickly. 😂
Imagine if, using the second method, it takes 50 consecutive losses to burn out the entire trading balance when using a 2% loss risk.
And I’m sure no trade can lose 50 times in a row.
If friends are still making mistakes on the risk of trading friends, hopefully this article will give you a positive impact and a positive view on derivative trading.
https://twitter.com/Jelocy/status/1681630466598903808?t=K8GoardJ4c_l6oN4oTixSQ&s=19
@gitshock.trading, always try to put source of your images in case you made it with Canva or downloaded from any copyright free sites or if the picture doesn't belong to you.
thanks for the positive input. I will edit my post.
🤝
You have shared a good management risk strategy with us. Sometimes setting a high leverage is more profitable if the coin moves in your favor, but if it doesn't, you have a big loss, which is what happened to me some days ago. Derivatives trading has to do with the idea of risk management; if not, a trader will keep losing.
thanks for the positive feedback guys.
I like to use high leverage. but I always use risk management in the second example I review, by adjusting the margins and finding the calculated loss figure. usually I use only 1% loss of equity.
I hope that in the future you can manage your trading risk even better, with what you experienced some time ago 🤗
Yes I have learned how to do that.
Goodluck bro 🤗