Hi,
I am learning how to use this method for trend following strategy.

In order to calculate position sizing, i am using the formula:   Contracts= Risk*Equity/ATR

BTC price: 3860 €
ATR:796 €
2% Risk
10.000€ Portfolio


Scenario 1:

Contracts= 0.02*10000/796= 0.251 BTC

Scenario 2:

% dif= 796/3860= 20% or 0.2

Contracts= 0.02*10000/0.2= 1000€ in BTC

Is that Okay? Can i use both method to know my position sizing? Value of both are the same.


My big question goes when i need to calculate Stop Loss. If i am using a:

1) 1 ATR SL

0.251 BTC * 796 (ATR) = 200€.    It's ok with my risk of 2% of my bankroll.

2) 3 ATR SL

0.251 BTC * 3*796 (ATR) = 600 €.  Here i'm assuming a maximum loss of 600, it's more than my risk. 3x more.

I am struggling to understand it, but can't find how to adjust my ATR SL according my risk rate.



-When i am entering a trade, for example 1.000€, and i am doing the calculations for my next trade, i count the 1.000 placed before out of my new equity (9.000€) or i should use still the total amount of 10.000€?


Thanks in advance!