Trade Bitcoin Trading

BTCUSD Trade Equity Management Styles & Methods in BTCUSD Trading

The best way to practice successful equity management in BTCUSD trading is for a btc usd trader to keep losses lower than the profits they make and earn when trading. This is called risk to reward ratio.

High Risk: Reward Ratio

This risk: reward ratio method is used to increase the profitability of an investment strategy by trading only when you have the potential to make more than 3 times what you're risking when opening a Bitcoin trade.

If you invest using a high risk : reward ratio of 3:1 or more, you significantly/greatly increase your chances of becoming profitable in the long run when trading Bitcoin bitcoin online trading. The chart below indicates to you how this market concept works:

Bitcoin Trade Money Management Methods in Example Explained - Bitcoin Trade Money Management Rules

In the first examples, you can make the observation that even if you only won 50 percent of your BTCUSD trade positions, you'd still make a profit of $10,000. Even if your win ratio went lower to about 30% you would still end up profitable as shown on the second example exhibited above.

Just remember that whenever you've got a good risk: reward ratio, your chances of being profitable are much greater even if your system has got a lower win percentage.

Never use a risk: reward ratio where you can lose more money on one trade than you plan to make. It does not make sense to risk $1,000 dollars in order to make only $100.

Because you have to win 10 times more to make 1,000 dollars back even if you lost only 1 bitcoin trade.

If you lose ONLY once you've to give back all your profits from the other ten winning trade transactions.

This type of investment strategy makes no sense and you will lose in the long term, guaranteed!

Percentage Risk Method

The percentage risk method is a method where you risk the same percentage of your equity balance per every trade transaction.

Percent risk based method specifies that there will be a certain percentage of your equity balance that is at risk per position. To calculate the % per every trade transaction, you need to know 2 things, the percentage risk that you've chosen and lot size of an open trade order so as to calculate where to put the stop loss order. Since the % is known, we shall use it to calculate the lot size of the order to be placed in the Market: this is known and referred to as position size.

Example

If you have an account balance of $50,000 in your trading account & risk percent is 2 %

Then 2 % is equivalent to $1,000

If three investors buy Bitcoin and the first one is using 20,000 points stop loss, second one is using 40,000 points stop, third one is using 50,000 points stop, and their trading position size will be:

Example 1:

Stoploss = 20,000 points

Risk % = 2 percent = $1,000 dollars

How many Bitcoin contracts to open based on How many lots to open where 20,000 points = $1,000

1 Point of BTCUSD Crypto movement = $0.001

1,000 Points BTCUSD movement = $1

20,000 Points Bitcoin movement = $20

$1,000 stop loss divided by $20 = 50 Bitcoins (50 bitcoin contracts)

Position size = 50 bitcoin contracts

Position size is 50 Bitcoins (for 50 Bitcoin lots 1 point movement =$ 0.05) ($0.05x20,000=$1,000)

Stoploss = 20,000 points

Simplified: if your risk is 2% or equal to $1,000, and your stop loss setting level is $20, then you'll open 50 bitcoin lots - 50 bitcoins multiplied by $20 stop is equal to $1000 point stop loss.

Example 2:

Stoploss = 40,000 points

Risk % = 2 percent = $1,000 dollars

How many Bitcoin contracts to open based on How many lots to open where 40,000 points = $1,000

1 Point of BTC/USD ==22==CryptoCryptoCurrency movement = $0.001

1,000 Points BTCUSD movement = $1

40,000 Points Bitcoin movement = $40

$1,000 stop loss divided by $40 = 25 Bitcoins (25 bitcoin contracts)

Position size = 25 bitcoin contracts

Position size is 25 Bitcoins (for 25 Bitcoin lots 1 point movement =$ 0.0025) ($0.025x40,000=$1,000)

Stoploss = 40,000 points

Simplified: if your risk is 2% or equal to $1,000 dollars, and your stop loss setting level is $40, then you'll open 25 bitcoin lots - 25 bitcoins multiplied by $40 stop is equivalent to $1000 point stop loss.

Example 2:

Stop loss = 50,000 points

Risk % = two % = $1,000

How many Bitcoin contracts to open based on How many lots to open where 50,000 points = $1,000

1 Point of Bitcoin movement = $0.001 dollars

1,000 Points Bitcoin movement = $1

50,000 Points Bitcoin movement = $50

$1,000 stop loss divided by $50 = 20 Bitcoins (20 bitcoin contracts)

Position size = 20 bitcoin contracts

Position size is 20 Bitcoins (for 20 Bitcoin lots 1 point movement =$ 0.0020) ($0.020x50,000=$1,000)

Stop loss = 50,000 points

Simplified: if your risk is 2% or equal to $1,000 dollars, and your stop loss setting level is $50, then you'll open 20 bitcoin lots - 20 bitcoins multiplied by $50 stop is equal to $1000 point stop loss.

Example: If a btc usd trader with $50,000 wants to calculate the annual income from his trade strategy

Annual income: If your system has got a win ratio of 70% & your risk reward is 3:1, and your stop loss is 20,000 points and take profit is 60,000 points and every month you make 100 trade positions trading standard lots, then your maximum annual income will be about:

For 1 standard BTCUSD lot profit per 1 point is $0.001

100 transactions*12 months = 1,200 transactions

Wins and Profit

70 % win: 70% of 1,200 = 840 profitable trade transactions

840 transactions * 60000 points = 50,400,000 points

50,400,000 points = $50,400

Losses

30 % losses: 30 % of 1200 = 360 losing transactions

360 transactions * 20000 points = 7,200,000 points

7,200,000 points = $7,200

Net Profit = $50,400 - $7,200 = $43,200

Income: $43,200

The above is just an example illustration of the amount you'll make that will depend on the risk : reward ratio of your Bitcoin system along with its win percentage ratio.

Other factors & aspects to consider include:

Max Number of Open Position - A final point to consider is the max number of open position positions - that is the max number of trades that you as a trader want to be in at any one time. This is another factor/aspect to decide when managing your account equity.

If for example, you choose and select a 2% risk management strategy per trade position, you may also say choose and select to be in a maximum of 5 trade positions at any one given time - each position at risk of 2%. If 3 of those positions close at a loss on the same day, then you would have an 6% decrease on your equity balance that day.

But if the other 2 trades make profit and your risk: reward ratio is 3:1 - then the 2 winning trades will make you 12% (3:1 risk reward means if you risk 2% your trade has got a chance of making 6% - therefore, two winning trades at 6% equals 12% gain)

Therefore, 12% gain for the day subtract 6% loss for the day equal a total of 6% gain for the day.

This is why you should learn and understand money management guidelines, the trading rules of risk reward ratio and how to calculate where to set stop losses based on the Bitcoin lots you open per single trade.

Invest with Sufficient Capital One of the worst mistakes that Bitcoin traders can make is attempting to open a account without sufficient trading capital.

The trader with limited equity will be a worried investor, always looking to cap losses beyond the point of realistic trading, but also will be often taken out of the transaction before realizing and getting any success out of their strategy.

Exercise Discipline Discipline is the most important thing one can master to become profitable when trading Bitcoin online. Discipline is your ability to plan your work and work your trade plan when trading Bitcoin online.

It is the ability to give a Bitcoin trade the time to develop without hastily taking yourself out of the market simply because you're uncomfortable with risk. Discipline is also the ability to continue sticking to your plan even after you have suffered losses. Do your best to follow the trading rules of your plan & cultivate the level of discipline required to be profitable when trading Bitcoin online.

Managing Trade Account Capital Basics

Money management is the foundation of any Bitcoin system as it helps investors to get profit when transacting in the online Bitcoin market. It is especially important when transacting in the leveraged online Bitcoin bitcoin market.

If you want to invest successfully in the online Bitcoin market you should realize that it's very important to have an effective trading strategy of money management because you'll be using leverage to place your orders online.

The variation between average profits and losses should be strictly calculated, the profit on average should be higher than the losses on average, otherwise trading Bitcoin won't yield any profits. In this case an investor has to come up with their own trading rules; success of each person depends on their individual traits. Therefore, every trader makes his own strategy and develop their own money management guidelines, based on the above guidelines.

When you're placing your BTCUSD orders put your ==22==stop--loss--ordersstoploss--ordersstop--losses in order to avoid huge losses. Stoploss orders also can be used to lock in the profits.

Consider the chance of getting profit against making loss as 3:1 - this risk to reward ratio should be more favorable on the profit side. Considering these rules and guidelines, you can use them to improve profitability of your strategy and try to come up with your own strategy that will possibly give you good profits.

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