Everything About the Investment Amount

[Laura777 1]

There are no fixed rules in trading, and everyone follows the strategies and trading plans that work specifically for them. However, there is one important concept that everyone should remember: what matters is how much you lose, not how much you earn. If a trader builds up their account, but then risks 100% of their funds in a deal and loses, it is not a successful trader. That is why today we will look into the question of what the ideal amount of investment might be and why.

Long-term investing and savings

Investing and savings might be a way to potentially grow revenue overtime and the amount of investment may depend on the investor’s age, income, determination and other factors. When it comes to long-term investing, there are different numbers that specialists advise on. But the number that is considered to be appropriate by many experts for long-term savings or investment is 10 – 15% of the annual income. With that said, it is an amount that might be put in savings, but it is definitely not the amount with which one should trade. Unlike savings, trading is highly risky and it can result in losses. Let’s see what the right investment amount could be for trading.

Investment amount in trading

Talking about trading, there is one risk management rule that is, possibly, the most important one. If a trader continuously loses a significant part of their trading balance, no matter the payouts they make, very soon there will be nothing left of their capital. It is just simple math. Trading with 10-15% of the capital could lead to substantial losses that will be hard to recover from. 

According to professional traders, the optimal and balanced investment amount in a deal is 1-3% of a trader’s capital. For example, if your deposit is $100, the investment in a deal should not exceed $3 for a balanced risk management strategy. But it doesn’t mean that this amount stays fixed as your balance grows. The investment is always a percentage of the capital, so if the capital grows, the investment amount grows with it.

Another way of implementing this rule is for example to exit deals as soon as the loss amount approaches 1-3%. However, this would be harder to control, unless a stop loss level is set, but even then it is easy to get carried away, so cautious traders might want to stick with a lower investment amount instead.

Pros and cons

Why is this approach favored by experienced traders? This rule helps a trader manage the amount of losses and doesn’t let them lose all capital in one trading session. No trader wins every single time and investing only a small percentage of the balance is a good way to potentially manage losses.

However, this rule may go against certain trading approaches like scalping, so traders whose trading style depends on investment amount variations should think about their trading plan ahead of time and set their own risk management rules.

Note, that even with the lower investment amount, a trader may still experience losses, so it is necessary to combine it with other risk management techniques.

[ricardoramc 49]

Hello, this post is very interesting, I very much agree with you to operate we only have to risk between 1% to 3%, another thing that I consider important is that at least our risk / benefit is at least 1: 3

[SamDz3 16]

Your day is happy..i.e. useful summary whenever trading is about in-depth analysis and great study whenever the deal is successful

[dr4ch3 18]

Really good post, it is very important for trader to manage their risk, to be profitable in long term.

[musik555 35]

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As an online cryptocurrency trading platform, the platform delivers a simple to use exchange for those looking to gain access to just about every possible cryptocurrency / token pairing in existence today.

Founded in 2014, YoBit is incorporated in Panama and has been at the forefront of the cryptomarket since before the market frenzy of 2017. The more than 6-year track record makes YoBit one of the oldest exchanges in the cryptomarket.

YoBit’s founders are made up of a group of European developers and crypto enthusiasts.

The ‘no frills’ platform is known for its simple to use interfaces that has drawn in both novice and more seasoned investors and traders.

Unlike many cryptomarket exchanges, YoBit also facilitates the trading of fiat money- cryptocurrency pairings.

The exchange also continues to deliver traders and investors with anonymity. In contrast to many exchanges, traders and investors do not need to go through KYC and AML verification processes to gain access to the YoBit platform and the cryptomarket.

YoBit’s platform does not only give access to the broader cryptomarket but is also supported globally, with no geographical boundaries.

In spite of its global and long-standing presence, YoBit has yet to be hacked, with adequate security measures in place to protect assets.

 

 

Check yobit.net 

YoBit.Net

[Ahmet Özkaya 28]

Whatever your investment amount, the half of it should be in cash in uncertain market conditions and based on the market conditions you have to decrease or increase your cash amount, in bear market all amount should be in cash, in bull market you should invest sth, not in cash but you should get your profit. 

[joemcgwa 3227]

For me the amount that I should advice to invest on your order must be 1% of your balance more than $10000, but for the balance below $10000 they must use 5% up to 10%.