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question regarding on how to determine position size

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by COINS NEWS 54 Views

i created this example to help me with this formula i found in the book called "The crypto trader" by Glen Goodman and idk if i got it right i spent like an hour or so trying to figure it out sicne it was so confusing so if u guys can tell me if i understood the formula right that would be really nice heres the formula :

total budget : $100 000

price of the crypto ATM : $0.91

ATR on 30 days : $0.129

price i bought at : $0.91

price of my stop loss : 0.714

so to my determine position size i should determine the difference between the price i bought at versus the stop loss (support line)

0.91 - 0.714 = 0.196

price bought at - stop loss = the money risked per coin

since i only want to risk 1% or less of my total capital i multiply by 5000 the money risked per coin to make it to $980 (wich is 0.98% of 100 000)

0.196 x 5000 = 980

now that i know that i want 5000 coin lets multiply the ATR by 5000 so it matches the the equation we did before

0.129 x 5000 = 645

now with those position i can say that i have 1.51 ATR (wich means if the crypto goes 1 and a half days downward at a rate of 0.129 per coin (or by $645 since i bought 5000 coin) the stop order will be trigered

submitted by /u/BadBLUNT
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