Calculating position sizes based on a simple, proven

effective risk management strategy.

As a trader, one of the most important yet overlooked factors in trading is the #1 rule.
Protect your capital at all costs. Which sounds great until you realize that to succeed
you must first risk said capital.

This can cause people to scratch their heads and wonder, well how do I do that
effectively?

For this example, I will use a trader Bob, and a CDW set up to demonstrate.

Backstory:

Bob decides he wants to trade BTC after he found Jayson casper on youtube and
signed up to his patreon. He takes the juicy course and now has an understanding of
how to successfully trade the market. Bob deposits $1000 in his Bybit trading account.

After some time he spots a potential trade set up and is waiting for it to play out. Bob
listened to Jay’s advice and never FOMO’s into trades.. He only fomo’s into the Jayson
casper Like button on youtube.
He marks an AOI (Area of Interest) and sets some alerts for a CDW set up.

While waiting for his level, to pass the time and resist the urge to fomo in, he collects
valuable, rare frog memes and shares them with his Fren Kpan. He knows these
memes are the 2nd most important thing a crypto trader needs. It’s a fact that you can’t
make money without them….

As price approaches his level (Green line) he checks for his confirmations and decides
he will take this trade if he can see the things he wants to see.

(Take Jays course to know how to trade these and what you’re looking for)

To get himself prepared for the trade in advance, he can use a Tool that comes with his
trading platform to work out in seconds what his position size should be. To avoid
delaying and adding time to this process Bob opens two browsers on Google Chrome.

P.s More advanced traders won’t need this but for Bob he is still a bit new and wants to
be sure he gets it right.
Bob selects the calculator button on one of the browsers. This is what it should look like:

For this we need to select the Liq. option highlighted in red

The only thing missing is where should the Invalidation be?

Unfortunately we won’t know that until the BTC reaches the level. Bob doesn’t preset
orders, he waits for the reaction and markets in, when his confirmations are met.
The first thing Bob needs to establish is how much is he prepared to risk out of his
account per trade? For this we will break down Bobs account:

$1000 account.

Risk per trade: 5% = $50.

Bob has accepted that in order to try and make money he is prepared to lose $50 and
has already accepted that once he enters the trade that money will be in the market and
effectively is gone. The good thing is with this mindset it means Bob will not get
emotional and scared if the trade starts turning against him and he won’t make any bad
decisions, he knows exactly what he stands to lose before he enters and can live to
fight another day if it does go against him.

He targets a 2:1 RR so if he risks $50 he wants to take back a minimum of $100.

So, we have established Bob’s risk per trade, and for this particular set up the:

TARGETED ENTRY is $21,798 (CDW level) (Planned in advance)

$50 Margin (5%) risk.

He adds this information to the liq. Price while waiting for the final piece of the puzzle,
his invalidation price. Where he would place a hard stop loss. (See below)
 As soon as the high is confirmed we can finish the process. Using the Leverage slider,
this means that Bob’s $50 risk stays the same but he can increase his position size to
gain the max RR without risking more capital, which is his #1 job.

Bob's trade plan is playing out how he wanted it to and now he has a very simple
invalidation price to cut the trade if the price comes above the high which is $21,891.

He uses the slider to work out the best RR possible with this in mind.
 In this case we can use the maximum available leverage, which means Bob’s position
size is $5,000. While only putting up $50, as the high we want to see protected is at
$21,891.

Even with 100x Leverage he can only be liquidated (removed from his position) at the
price: $21,907.53, which is above his invalidation zone anyway where Bob would be
exiting the trade regardless, as his idea has been invalidated. All Bob needs to do is set
the stop loss between $21,891.5 to $21,906.53 To avoid being actually “liquidated”

Bob only places an ISOLATED trade down for this, so the absolute maximum loss no
matter what happens, is $50.

Nothing can change that.

Here is a safer market entry example.

Bob can now adjust the figures accordingly in case he misses his ideal entry to make
sure that the plan stays the same and he is still only risking $50 or less. All this can be
done with the calculator on bybit.

Bob wants to make consistent gains over a long period of time and is prepared to risk 1
- 5% of his account per trade to achieve this using this clear strategy which can be
applied to any trade set up, not just a CDW.

Bob will grow his account with a 60% W/R and avoid any nasty surprises if he sticks to
this plan without fail.
All Bob’s aside, this was a real (paper) trade I took, using this method. It works. Any
questions, please ask.

DISCLAIMER:

THIS IS NOT FINANCIAL ADVICE, I ONLY TRADE ON DEMO ACCOUNTS BECAUSE

I'M STILL WAITING FOR MY REFUND FROM WHITE PHOENIX, IF YOU SEE HIM
LET HIM KNOW PLEASE. THIS IS HYPOTHETICAL AND IF YOU TRADE LIKE THIS
AND GET REKT, READ THE FIRST LINE AGAIN OR SUBMIT A REFUND FORM TO
WP. HE IS A BIT SLOW BUT MR TAKE NOTES SHORTED DXY LOWS SO THEY
ARE TRYING TO GET A REFUND THERE ALSO. VERY MESSY.