Bitcoin Forum

Hi,

Whats your money management and risk/reward per trade for something as volatile as BTC?

Please mention your leverage use, if any.

I have traded/trade almost everything with specialization in Forex/Stocks/Derivatives. I will chime in if there is any interest.

I am not an expert in trading, just wanted to share my trading money management techniques.
I usually go for lower lot size which occupies up to 20% in my available capital amount. This ensures withstanding till prescribed stop loss limits.
For bitcoin trading, I never opt for leverage, I am happy to stay within 1:1 .

Hey I think I do good money management.I never invest not more than 5% of my total investment.Using this strategies I gained profit last six month.I know if in case I lose my 5% I can recover it quick but lose big its very hard to recover.I used 1:100 leverage I think this best leverage ever because this leverage stop you big volume trade.thanks

I play the markets in a risky manner as I do marginal trading on a 2.5x leverage on altcoin markets...
I know that it takes a big heart and such investment too in order to make it to your expenses being sorted out with these things, and I always go full on this when I know that it will get me out in green...

The first rule of money management is; Do not put everything in the same basket.

The second rule of money management is; You make your profits when you are buying, not selling.

Those are my rules.

I don't have a special money management, but I'm only trying for making my simple management with making accountant for every money is get a spending or receiving.

I don’t have much experience about money management but I do it at my own levels. The very first thing is to make sure funds are diversified no matter invested or not. One should make parts of his funds keep it secure and then investing those parts in various investments opportunities. Never expect returns from all investments so make sure you have additional provisions to cover any possible losses. High risk, high returns and low risk, low returns is a thumb rule so don’t just look at risks but examine the returns too.

I plan management money in trading before i do trading, are like how much the profit will be taken, how much  i have to do cut lost if the price going down and when i have to entry and exit in the markets and usualy i traded altcoins and i didn't using leverage and i didn't trading except altcoins.

I am disregarding the only 5% of capital/investment as there is always human error unless algo with rules.

Leverage is a double edged sword. 1:100 is HUGE leverage.

In Forex we would call it suicidal. Why? Because unless your trading is 100% algo, with iron clad MM rules human error will come in and 1 trade will be the end of the account(doesn't matter if in 10 previous human error trades there was a profit). Irrespective of account size.

Example:

The entire Lehman Bro's. saga was at leverage 1:10(Simplifying).

I am ofcourse simplfying here. But its just an example.

Need some more information. What is the usual stop, how much does it take out of your capital if 5 consecutive trades are stopped out.

Do you have an excel sheet which tells you before going in to a trade the loss and potential gain? What is the risk reward on trades? Short-term trades? Long-term trades?


If the excel sheet is not present, make it. :)

Couldn't agree more.


For serious traders(Investors can be classed differently): Always pay yourself for your time and energy, set an amount to take out. Build a nestegg.


I don't know about this part, frankly its a myth. Pro traders always have a safety net, capital protection is the number 1 rule.
Look for low risk, high return scenarios. Even then safety net.

Example:

Breakout Trading

Oversimplification, but its an example.

I don't have a special money management, but I'm only trying for making my simple management with making accountant for every money is get a spending or receiving.
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Thats a perfect start.

May I suggest keeping a journal of your trades and analyzing, losses and winners.

This is for everyone:

Always keep a journal of trades, with the reasons for you entering a trade. If you can't list reasons before opening a trade, leave it. Trading opportunities are a dime a dozen.

Spend atleast 2 hours(depends on number of trades) on your journal analyzing the good and bad trades and the possible reasons will be crystal clear.

If I missed your post and you would like me to chime in. Please bump and I will respond to your last post here.

I don't like risk/reward. let the trade run when it's on the good side.
I calculate my risk from the stoploss

Thats very true.  Never(subjective*) cut a winning/profitable trade.(Revision at the bottom)

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*Subjective, an example scenario where it doesn't work:

1- Range bound trading.

Price goes from 630-1 USD down to 590 USD and bounces.

Strategy: Buy at 591, SL: 589.6.

Entry: Only if price goes to 590 and comes back to 591.  (Its counter-intuitive, I can explain the reasoning behind it)

Trade goes in the predicted direction. Reaches 630.

Now do we close the trade or let it run. Or just change the SL. If yes to SL change, what is the new SL?

I would close it. Simply because I would want to keep a SL of say 625, Thats 5 USD of profits I am ready to give back to the market.

Wait for breakout. i.e. cross above 631, take the trade again and SL is now say 629. WQhich is 3 less than what  I would have given back to the market if it reversed.

Haven't considered whether I would switch the trade at the 630 point, lets consider it:

Entry: Price goes to 630 and reverses to 628(depends), Enter short SL: 631.3

Can the price trigger both trades? Yes, but calculate the potential profit from both trades and it doesn't make sense to hold the position.

-----------------------------------------------------------

Never cut a winning/profitable trade in a trending market. Trends cannot be predicted hence open targets with SL changes when possible/rational.

i make trading with only half or less bitcoin in my wallet and i still have the rest of bitcoin in my wallet because if something happen like the rate is going down, i still have bitcoin to make an order to another coins that maybe can give me profit. i still make analysis for the coins that have potential to increase on rate so i will not use my bitcoin with no clue at all.

Just realised this is the wrong sub-forum for this discussion.

I was looking at it from a speculative trading perspective. The profit from rise/fall of prices.

My apologies.

Request mods to move the thread.

Thanks

There are many money management techniques online, you can easily follow that as they give more detailed way on how to manage your money, my advise is that when you are investment or trading, only manage the amount of money that you can afford to lose.

But no need to search it in online how to manage money. I think the best way is to control your self that do not buy if not important . And right op invest it trading and manage it easily so that you can not lose everything your money. Because trading is for a risk takers it like gambling.

what i do for the risk/reward per each trade is that i look at the prices and the history of the price in short and long term and then decide how long i am going to hold that investment and even in volatility there are still a max and min price that you can put for yourself as your stop loss and profit aim.


i don't like leverage and don't use it either.


please do chime in :)

what I use for MT4 is this: http://www.forexfactory.com/showthread.php?t=281772
just drag the line at your stop level and it will calculate the position size acording to what you chose.
unfortunatly we have few options to trade BTC with MT4

Your wish is my command.

Leverage = double edged sword.

Used properly, complete understanding of how it works, it will help a trader make enough money to support himself.
There are very few traders(Pro/full-time) who can trade without using leverage, it just doesn't pay the bills to not use it.

Example:

Scenario 1: No Leverage

Buy 100 BTC

No Leverage = 100 x 500 USD (assumption) = 50,000 USD

SL: 490

Target: 525 USD

Holding Time: Till stopped out, No time limit.

Lets assume target is hit in 1 year (Assumption for simplicity)

Profit = 25 x 100 = 2500 USD

Profit/Day = 2500/365 = 6.84 USD

Scenario 2: Optimum Leverage

Buy 100 BTC

1:5 Leverage = 100 x 500/5 = 10,000 USD

SL: 490

Target: 525 USD

Holding time: TP or SL.

Assuming target hits in 1 year. Intermediate requirement fund: Assuming your broker offers 1:50 Leverage, not required.

Profit:
i) 100 x 25 = 2500 USD

ii) 40,000 x 2.5/100 = 1000 USD   (Assumed a percentage on fixed deposits or similar, 1 year no compound)

Total Profit/Day: 9.58 USD

%age terms Profit/Day: ?

I haven't done the calculation of SL hit on trade. If one were to calculate that, it shows another dimension. Flip it further and you realise that your willingness to lose 100 x 10 = 1000 USD could have been doubled if confidence of position was higher and leverage was used.

But leverage is complicated and this doesn't even scratch the surface. I don't think I understand it completely either.

I remember something I heard:

"An average trader gets paid on winning trades, the legendary get paid to take positions" - can't remember

Thats a nice option.

But, imho, it is akin to casino's not having clocks.

The more quickly you make decisions the larger is the chance you are making a mistake. One of the main reasons I advocate using/calculating R:R is not because it does a lot for the trade. It is to do with your mental frame of mind.

You are not looking at the chart and saying: thats a great set-up it cant possibly hit my stop. It gives you 2-3 minutes where the your brain looks at thins in black and white while your hands are either feeding it in to an excel sheet or a pen and paper. That 2-3 minutes has helped me to avoid so many trades(some of them ended up good, some bad.) the net of whom has been in the red.

To each his/her own though.


 

well, you can always use a stop-watch, lol
but I understand what you mean

One of the vast and effective job in this world is the money management. Because you need to know where to deposit and how much you will get and when. So need to be very updated about the various schemes and instruments of investment

i think i only know a little about money management, and as far as i know, if for example i only have 1 btc, i will split it into few parts, i will keep 0.3 bitcoin in my wallet, i use the other 0.3 bitcoin to trading, and for the rest 0.4, i will use it for backup fund if something bad is happen. i only know that and i think i need learn more about money management.

Send me a message with specifics if you need any help.

Yes. Its one of the most demanding jobs in the world, its rewards are in line with the demands and efforts of though. :)

I would dare to say that money management is almost science and not everyone is good at that. This also takes skils and knowledge and to know how to deal with money and to get the max out of it. There are also money gurues who teach peole how to atract, earn the money and keep it. It is very complicated and takes time to get successful.

I just go complete contradict to your statements. Money management is not a rocket science, but it needs intense practice so that we can do that with all perfection. Just learning it will not work for any investor because no authors cover all the aspects of money management theories.

Moreover, all investors will find themselves better in money management in second and third attempts onward, yes everyone will face problems in their first attempt mostly.

very honestly i am not good in money management, although i am earning a good amount per month but sill i cannot manage my money in a proper way.

the best way to conduct financial management is to make sure we are spending less than our income.
it is a simple appreciation of financial management.

You have to invest only in these currencies which will have more active developers and will try to promote their coin and will try to provide services with their coins as coins like that grow more higher and if you want to invest in bitcoin then it is a good time to invest now as it is going to increase.

The first rule is ok as I had a bad experience when putting all "eggs" in one basket which I lost mostly all of them.

The second rule is pretty good but this does not work always and not everywhere, you make profits when you sell them for a higher price than you bought it.

At the moment how I manage my money is investing a little bit on good things and holding most of my money and join the trading world when I have time.

As long as we are comfortable with our way on managing your money and it has a good outcome then that is great, honestly in my case I do not earn big amount of money so as much as I want to have big savings and invest in the future, I can hardly do it, but still I am hoping I can increase my income so it would be easy for me to manage my money.

The more you have the harder it gets to manage the money because you should spend more time and more power on it.

Because we have invested somewhere (in my case in ICO) i have invested a small amount of 0.2BTC and I don't expect to become right immediately on the first day but it's good to know how it goes and to understand when is the right time to invest and sell.

i think i am not too good in money management, as it is a fact that i am earning a good amount money but after some days i became out of money as i do not know how to manage my money and therefore i wast most of my money in some useless things which really make me sad.

I am 85% in FIAT, %10 Gold, %5 Bitcoin now. FIAT is divided to USD %60  and EURO %25. I always short it if one of them goes through the roof and buy them when it hits the floor. This works for me and i think it should work for everyone. I don't trade my Gold or Bitcoin. I panic hold them. If they lose value i see it as an opportunity to buy more. I trade FIAT for FIAT only.

i think i am not too good in money management, as it is a fact that i am earning a good amount money but after some days i became out of money as i do not know how to manage my money and therefore i wast most of my money in some useless things which really make me sad.

My advice is don't use leverage at all. The alt space is so manipulated that a trade can do against you and you end up losing everything. That is bad enough if you haven't used leverge - if you have, you may end up seriously hurt.

MT4 is the best used for forex trading, when you are talking about bitcoin or cryptocurrency trading you don't bring that into the scenario. The us of MT4 is highly technical which is essentially made for forex trading.
But trading bitcoin requires only the knowledge of where the price is high or low and buying it from the low price exchange with motive of making profit by selling in the high price platform.

the good money management
must don't afraid about cut lost, is trade wrong prediction is must cut lost
and money management in trading forex only use about calculation lot is compare capital money