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Manage Your Risk Like A Pro Trader Cheat Sheet

This document provides formulas and explanations for key risk management concepts for cryptocurrency margin trading, including: - Risk/reward ratio calculations for both long and short trades - Stop loss and position size formulas to determine optimal trade size based on portfolio size and risk tolerance - Exchange recommendations for margin trading along with signup details - Additional cheat sheets for order cost with leverage and tracking win rate statistics The overall document aims to educate traders on managing risk like a pro through understanding and applying these quantitative trading strategies.

Uploaded by

Mircea Todor
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Download as PDF, TXT or read online on Scribd
761 views18 pages

Manage Your Risk Like A Pro Trader Cheat Sheet

This document provides formulas and explanations for key risk management concepts for cryptocurrency margin trading, including: - Risk/reward ratio calculations for both long and short trades - Stop loss and position size formulas to determine optimal trade size based on portfolio size and risk tolerance - Exchange recommendations for margin trading along with signup details - Additional cheat sheets for order cost with leverage and tracking win rate statistics The overall document aims to educate traders on managing risk like a pro through understanding and applying these quantitative trading strategies.

Uploaded by

Mircea Todor
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Manage Your Risk

Like A Pro Trader


Cheat Sheet
Written By: Jacob Canfield

To Keep You Grounded And Unemotional In Your


Trades So You Can Make Money And Protect Your
Portfoliio.

Written By: Jacob Canfield


https://www.signalprofits.com
Formulas In The Cheat Sheet

• Risk Reward Formula


• Stop Loss Formula
• Risk Amount Formula
• Position Size Formula
• Contract Size Formula
• Win Rate Formula
Bybit Exchange

• The exchange I use for margin trading


Bitcoin currently is Bybit.

• They allow for simple use of stop


losses, position sizing and hedging
into USDT.

Sign Up For An Account Here:

SIGN UP FOR BYBIT

Click Here To Sign Up


Get $60 Sign-Up Bonus
When You Deposit .2 Bitcoin
R:R = Risk Reward For LONGS
• The reward-risk ratio is equivalent to the
reward (take profit) divided by the risk
value(stop loss).
• Usually represented by a ratio or a
number.
• Example: 4:1 = 4 to 1 risk reward. (or
4 R:R)
• Represents how much potential profit
you make by how much you stand to lose
with the trade.

FORMULA:

(Target — Entry)
___________________________________________________

(Entry — Stop Loss)
R:R = Reward/Risk

Pair: BTC/USD
TRADE: LONG
Entry Price: $3500
Target Price: $3850
Initial Stop Loss: $3450

Reward: $3850-3500 = $350


Risk: $3500-3450 = $50
R:R Ratio = $350/$50 = 7
R:R = Risk Reward For SHORTS
• The reward-risk ratio is equivalent to the
reward (take profit) divided by the risk
value(stop loss).
• Usually represented by a ratio or a
number.
• Example: 4:1 = 4 to 1 risk reward. (or
4 R:R)
• Represents how much potential profit
you make by how much you stand to lose
with the trade.

SIMPLE FORMULA FOR SHORT TRADE:

(Entry - Target)
___________________________________________________

(Stop Loss - Entry)


R:R = Reward/Risk

Pair: BTC/USD
TRADE: SHORT
Entry Price: $3850
Target Price: $3500
Initial Stop Loss: $3950

Reward: $3850-3500 = $350


Risk: $3950-3850 = $50
R:R Ratio = $350/$50 = 7
STOP LOSS

• The point at which you will exit the


trade for a loss because your trade
idea is wrong.

ENTRY - EXIT
___________________________________________________

ENTRY
STOP LOSS

EXAMPLE:
LONG TRADE
Entry = $8,000
Exit = $7,500

STOP LOSS CALCULATION

8000 - 7500
_________________________________
= 6.25%
8000
RISK AMOUNT CALCULATION

• The amount of money you are willing to


lose expressed as a whole value in BTC
or USD.
• Allows you to quickly calculate your
position sizes.

FORMULA:
Portfolio Size X Risk Per Trade
RISK AMOUNT CALCULATION
EXAMPLE
Using USD
• Portfolio Size: $10,000
• Risk Per Trade: 1%

EXAMPLE
10000 X .01 = $100 Risk Amount

Using BTC
• Portfolio Size: 5 Bitcoin
• Risk Per Trade: 1%

EXAMPLE
5 X .01 = .05 BTC Risk Amount
POSITION SIZE CALCULATION

• Percentage Of Your Portfolio To Risk


When Factoring in the Stop Loss.
• Divide that money amount by the price
of the crypto.
• This gives you your lot size to purchase
to manage your risk.
• Number of lots/contracts you buy or
sell.

Risk Amount
_____________________________
Distance to Stop Loss
POSITION SIZE CALCULATION
EXAMPLE

Pair: BTC/USD
Portfolio Size: $10,000
Risk Per Trade: 2%
Stop Loss % = 4%

$10,000 X .02 (2% risk)


_____________________________
.04 (4% Stop Loss)

POSITION SIZE = $5,000


POSITION SIZE CALCULATION

INSERT INTO
QTY USD
ORDER COST FORMULA
WITH LEVERAGE

TO DETERMINE YOUR CONTRACT SIZE WITH


LEVERAGE, JUST DIVIDE YOUR POSITION
SIZE BY THE AMOUNT OF LEVERAGE

1X = 1.42 Bitcoin
3X = .47333
5X = .284
10X = .142
20X = 0.071
50X = 0.0284
100X = 0.0142
WIN RATE
CHEAT SHEET

• How many trades you won over a


specific time period.
• Most common time frames traders
measure are
weekly/monthly/quarterly/annually.

Number of Winners
___________________________________________________

Total Number of Trades


WIN RATIO
EXAMPLE

• 45 Winning Trades
• 25 Losing Trades
• 70 Total Trades

45
_______________
= 64.3% W/R
70
Want More?
Get The Full ‘Ultimate
Beginner’s Course For Margin
Trading Today’
If you want to learn about margin trading from a
Professional trader, check out the full margin
Trading course here.

YES, I WANT THE COURSE

CLICK HERE

Follow Me For Updates, Calls


and High Level Insight.

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