What is it?
The Position Size Invalid or Zero Position Size warning occurs when VEMA calculates the position size of your trade setup to be less than the minimum position size allowed by the exchange for that symbol.
Why does it occur?
Let's take the example of OKX's BTC Perpetual contract BTC-USDT-SWAP.
Using this site, we can see this coin pair has a contract value of 0.01 BTC.
At the time of writing, BTC is around $21,130 USD. For simplicity we're going to round that down to $20,000 USD.
So 1 contract on the BTC-USDT-SWAP pair is worth $200 USD.
0.01 Face Value x $20,000 USD BTC Price = $200 USD Contract Value
1 contract is also the minimum position size you can have on the BTC-USDT-SWAP pair, OKX will not allow you to enter fractions of a contract (Ie 1/2 a contract). Meaning the minimum position size value is $200 USD.
This is where the issue lies.
Whatever your Stop Loss (SL) percentage on the chart is for this trade, is the proportion of $200 you'll risk (regardless of leverage) if you enter this trade with a position size of 1 contract.
This means if you have a 3% Stop Loss, you're risking $6.
3% Stop Loss x $200 USD Contract Value = $6 Loss if Stop Loss is hit
If your account balance is $100 USD, and your account risk percent is set at 1%, for $1 of risk, VEMA returns the warning that you cannot take this trade. VEMA knows that to take this trade with the smallest possible position size allowed by the exchange would lead to you risking more ($6) than you've specified is you're maximum ($1).
So for VEMA to allow this trade, you'd need to set your account risk percent to 6% or more. That way VEMA knows you're OK with this $6 risk if your 3% Stop Loss was to be hit.
If we wanted to only risk $1, but still use our 3% stop loss, we'd need a position size worth $33.33 USD, or 0.1667 of a contract. Because the minimum position size allowed by the exchange is 1 contract, this is impossible.
3% Stop Loss x $33.33 USD Position Value = $1 Loss if Stop Loss is hit
$33.33 USD Position Value / $200 USD Contract Value = 0.1667 Contracts Position Size
How to solve it?
There's a few different ways to get around this issue. Be warned they're not all created equal.
Some I'd like to caution against because I'd consider them "bad habits" in trading, but I don't want to impose my beliefs on you, so I've included them in case tweaking them still fits you're trade plan and risk management style.
1. Don't take the trade
When I first started trading, My account balance was quite small and I used BitMEX for my leverage trading. Their ETH quarterly futures had a minimum position size of 1 ETH, which was worth about $300 USD at the time.
This led me to run into this same issue, there was just no way for me to have my stop loss where it needed to be, while still only risking 1% of my account on an ETH trade due to the expensive minimum position size.
My solution was to not trade ETH. I couldn't do it within my risk management rules, so I cut ETH out and focused on trading the pairs with smaller minimum position size values that I could trade while satisfying the rules I'd set for myself. Which brings me to solution two.
2. Trade a different coin pair
The USD value of minimum position sizes can differ across pairs.
On OKX, at the time of writing, BTC has a contract value around $200 USD, ETH around $100 USD. These are quite large. DOT on the other hand has a contract value of 1 DOT which is about $8 USD, meaning you're much less likely to hit this issue trading DOT.
Using this site, to see the face value of a contract, then multiply that by the coins USD value to get the USD value of it's minimum position size.
3. Trade the same coin pair on a different exchange
One of the beauty's of VEMA is that once you've deposited money and linked an API key, trading with multiple exchanges is all done from the one interface.
Value of minimum position size on BTC perpetual swaps on each exchange at time of writing:
OKX: 0.01 BTC - $210 USD
BitMEX: 0.001 BTC - $21 USD
4. Increase your account balance
Increasing your account balance will make your selected "account risk percent" worth more, leading to this issue occurring less. However it will also increase the amount you're risking, so beware of that if you choose to employ this solution.
5. Change your Account Risk Percent
As I showed above, increasing your account risk percent can be used to tell VEMA you're happy to take the risk required to fund a minimum position size trade. I'd caution heavily against it for large increases (In the video above I had to go from 1% to 24% account risk), but if I wanted to risk 1% but had to increase it to 1.1%, I'd see that as being acceptable. Only you can know your rules.
6. Change your Stop Loss
I don't like 5 but I really don't like 6.
You can decrease your SL, without increasing your account risk, to get VEMA to allow a position. But it's a solution I personally would recommend heavily against. In my opinion your stop loss needs to be where it needs to be. If you can't take the trade with your stop loss there, you can't take the trade full stop.
In short, this issue arises from the minimum position size allowed by the exchange, it's not something VEMA can control. The best we can do is advise you on what to do if you see this issue, which hopefully this article and video has helped to do.
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