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Biturai Trading Wiki
The Biturai crypto encyclopedia: AI-assisted, data-informed, and continuously quality-audited.
Selecting Safe Leverage: Aligning Leverage with Volatility and Stop-Loss
Choosing the right leverage in crypto trading is a critical risk management decision that involves dynamically linking your leverage ratio to market volatility and your stop-loss placement.
Maintenance Margin: Understanding the Equity Threshold in Leveraged Trading
The maintenance margin represents the minimum equity required in a margin account to keep a leveraged position open. Failing to meet this threshold triggers a margin call, potentially leading to forced liquidation of assets.
Making a Position Risk-Free After Partial Profit-Taking
Making a position risk-free involves adjusting the stop-loss to the entry price after taking partial profits, ensuring no loss on the initial capital. This strategy protects investments and reduces psychological trading pressure.
Scaling In: Gradually Building a Position
Scaling in is a strategic approach where an investor builds a position in an asset by purchasing it in multiple, smaller increments over time.
Loss-Streak Rule: Pausing After Consecutive Losing Trades
A loss-streak rule is a critical risk management protocol that mandates a temporary pause from trading after a specific number of consecutive losing trades.
Defining Weekly and Monthly Drawdown Limits
In trading, a drawdown represents a temporary decline in portfolio value from a previous peak. Setting weekly and monthly drawdown limits is a fundamental risk management practice designed to protect capital and enforce disciplined trading.
Daily Loss Limit: Setting Your Maximum Daily Loss
A daily loss limit is a predefined maximum amount of capital a trader is willing to lose within a single trading day. This critical risk management tool helps prevent excessive losses and promotes disciplined trading behavior.
Parametric vs. Historical Value-at-Risk Calculation
Value at Risk (VaR) is a widely used metric to estimate the maximum potential loss of an investment over a specific period at a given confidence level.
Time-Based Stop: Closing a Position After a Set Time
A time-based stop automatically closes a trading position after a predetermined period, regardless of price movement.
Jensen's Alpha: Measuring Portfolio Outperformance
Jensen's Alpha measures an investment's performance against its expected return, considering its systematic risk. It helps determine if a portfolio manager generated returns above or below what the Capital Asset Pricing Model predicted.
Using Parabolic SAR as a Trailing Stop Mechanism
The Parabolic SAR is a trend-following indicator that helps traders identify potential trend reversals and set dynamic trailing stop-loss orders.
Catastrophic Stop: The Emergency Brake Against Total Loss
A catastrophic stop is an automated trading order designed to prevent the complete loss of capital in highly volatile markets.
Volatility Stop vs. Fixed Stop: Advantages and Disadvantages
Understanding the differences between volatility stops and fixed stops is fundamental for effective risk management in trading.
Percentage-Based Stop-Loss: Setting Stops at a Fixed Percentage Distance
A percentage-based stop-loss is an automated order designed to limit potential losses by closing a trade when an asset's price falls by a predetermined percentage.
Break-Even Stop: Moving Stop Loss to Entry Price
A break-even stop is a risk management technique where a trader adjusts their stop-loss order to the initial entry price of a trade once it has moved into profit.
Chandelier Exit: An ATR-Based Trailing Stop
The Chandelier Exit is a volatility-based indicator designed to set dynamic trailing stop-loss levels for trading positions. It helps traders protect profits and identify potential trend reversals by adapting to market volatility.
Volatility-Based Stop Loss: Aligning Stops with ATR
A volatility-based stop loss dynamically adjusts to market conditions, preventing premature exits during normal price fluctuations.
Guaranteed Stop Loss: Eliminating Slippage in Trading
A guaranteed stop-loss order ensures a trade closes at a pre-selected price, irrespective of market volatility or gaps. This critical risk management tool provides certainty in volatile markets by preventing slippage.
Cash-Hedge: Reducing Risk with Increased Stablecoin Allocation
A cash-hedge strategy involves increasing one's stablecoin holdings to mitigate portfolio volatility in cryptocurrency markets.
Protective Puts for Crypto Portfolio Hedging
A protective put is an options strategy designed to safeguard a crypto asset against potential price declines.