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Rule Du Jour: Rule #27 Risk Mgt w Leverage (Patreon)

Published:
2024-11-25 22:04:14
Imported:
2026-06
Tags:

Content

As you know I am in a Perp Trade. My rules were always strict although I bend them on occasion.

1) never more than 1% of SOL in a Perp

2) never more than 3.3x Leverage

There is a lot of sabre rattling going on right now in the UKR and betting odds are rather terrifying this is impacting Bitcoin and thus also SOL.

Risk Management Rule for Leveraged Trading

  • Limit Exposure: When trading with leverage, ensure that only a small percentage of your total portfolio is at risk. For instance, keep leveraged positions to no more than 1% of your overall holdings. I am higher than that for me now as 80% of my PERP Winnings are on the line - if it blows up, it is the table money. Again, my liquidation level is $181

  • Be Aware of Liquidation Risks: Understand your liquidation price and monitor how far you are from it. Being significantly underwater can lead to forced liquidation, so keep a close eye on market movements.

  • Have Emergency Funds Ready to Bail Out a Perp: I have SOL ready to bail out my Perp if the time comes. I also have a lot of cash on the side circa 8%

  • Short Term Hedge:  You can also considering a many multiple eg 10x Short Hedge to short term hedge your LONG SOL Perp, i sometimes do this just to protect my downside during a down draft.

  • Manage Success Wisely: Even after a series of successful trades, remain cautious. Winning streaks can lead to overconfidence, so recognize that luck can change. I knew this going on... which can be lethal. But I am very strict on Risk Mgt and will not allow any liquidation. Again I am $60 away from a liquidation event.

  • Take Profits Regularly: As you gain profits, take some off the table and set it aside in another wallet.

  • Leverage Responsibly: Calculate your overall leverage carefully and avoid excessive risk. In this example, an overall leverage of 3.69 was used—ensure it aligns with your risk tolerance and market conditions.

By following these guidelines, you can manage the inherent risks of leveraged trading more effectively and protect your investments from significant losses. Remember if you do not do this you can win 15 times in a row and then lose it all on the 16th Trade.

Comments

Tara

Question - apart from the ongoing fees, is there anything wrong with just extending your liquidation level by adding more collateral to ride out the dip??

Simpon
>>156456558

The main risk there is that you are risking more capital, so if there is a huge market downturn, then the additional capital also risks liquidation. As for fee's - they are paid on position size, so if you just increase capital to reduce leverage, you do not pay more fees on that.

CryptoFarmer

At this point, there is a potential my fees will equal profits and will cash out even, if this goes on another five days. I’d rather break even or at least lose less money when it goes up, rather than pulling out. I lost a lot of money pulling out because I was scared only for it to go right back up. This is a learning experience. So long as I have enough side money to not get liquidated, I’ll ride the wave. Only my 2¢, NFA!!

S_95

My liq was 217 today went 218,6 and then i put more money to bring it 213. I was sweating like 10 times. Almost had heart attack. My husband liq was 221,5 and its reached 221,7 so he also put more money. That’s crazy. They was its works.. lets say Inshallah it will go up. Otherwise 😂😂🫀💔❤️‍🔥

Pappa-Loose

The real question is what happens when the Asian markets wake up… do they buy the dip or dump the market 🤔

Getting_Barrelled

What do we think will be the bottom? Wondering if it's worth buying the dip not going to use it for perp as I've already risked enough.

Vegaxan

Best approach is always to have enough cash to cover your perp . Otherwise don’t do it.

Pink Panther

This is not financial advice, nor am I seeking any. However, I’d appreciate hearing your thoughts and opinions on this. Perhaps James might have some insights as well! Again, NFA – my goals aren’t your goals, and your goals aren’t mine. This is just an open discussion to understand what others are doing and gather perspectives. I’m currently down by 30%, with my liquidation price sitting at around 180. I’m contemplating taking the loss and repurchasing at the current price, which would allow me to lower my liquidation level even further. The plan is to raise my target price back to 260 or higher. By lowering the liquidation point, I’d aim to recover my losses if the price returns to 250. Should the price reach 260, 270, or even 280, I’d move into profit.

doctor0c

Hearing that the fees for perps on JUP are excessive. Could someone give examples? I only found some arbitrary value which seemed pretty low, lik 0.0008%/hour, but it depends on liquidity situation. What is it right now and what are the fees for opening and closing a perp position? Many thanks in advance!

CRYPTOROACH

Just happened now with me! As James says, keep your tapping dancing shoes always around. To avoid liquidation on Bybit, I undertook the following steps: 1. Acquiring SOL for Transaction Fees: I needed SOL (Solana) to cover transaction fees on Solflare. 2. Challenges with Direct Conversion: Converting NOSANA to USDC directly on Solflare was not possible due to insufficient SOL to cover the fees. 3. Difficulty Purchasing SOL on Solflare: Buying SOL with a card on Solflare proved to be complex and not straightforward. 4. Using Binance to Purchase SOL: I opted to buy SOL on Binance, where the process was more user-friendly. 5. Transferring SOL to Solflare: After purchasing, I transferred the SOL from Binance to my Solflare wallet. 6. Converting NOSANA to USDC: With sufficient SOL in Solflare, I was able to convert NOSANA to USDC. 7. Transferring USDC to Bybit: Finally, I sent the USDC to Bybit to secure my positions and prevent liquidation. This experience highlighted the complexities involved in managing assets across different platforms and the importance of ensuring sufficient funds to cover transaction fees to avoid liquidation. NOTE: Keep always a certain amount on your wallet/s to cover fees. Unbelieve this distraction that could be quite costly for me. Solved!!!

Elpilos

My 1 % of my sol is 1 sol 🤭

Elpilos
>>156467711

Waching my long perp: Opening Long:the higer fee i had is 50 cents Close long: 87 cents maximum