Risk Management & Money Management

Hello all 

 Read this article almost 50 times .

 I hope it will help u through out ur life .

 Stock market is based on 2 aspects only 

 First is study 

Second is risk management 

Understand what I mean trying to explain .

 U must be agree 

What ever I m posting here . We r getting 90 percent accuracy ..

 If u don't agree with this ... U should switch the channel 

Now lets talk about Paul Tudor Jones. ..world greatest trader.

 Who has made 40000 crore in 10-15 year ...

 He said 

 Every time I make any trade 

 I assume my sl will be triggered .

 As happened to many of us every time ..

 U decide yourself .that in every trade I will lose only 1000 rs or 2000 rs .or 5000 rs .

 As per ur capital amount .

 Don't think profit when u make a trade 

 Think the loss .what max u get .

 Then u will make money 

 Trading requires only one thing .

 How to protect money .

First 

 Not .

 How to.make profit .

 If u r able to protect money .profit will.come eventually ..

 Let's take the example of today trade ...

 Whoever advisor .. not necessary me 

 Anyone in the country . Gives any call ... Keep remember the sl..

 Suppose Dmart call SL 12 your max risk is Rs 1000 per trade then your qty shud be 1000/12 - 83 qty. 

Likewise if your max loss is Rs 100 per trade, then your qty shud be 100/12 - 8,not more than that. 

 So every time u buy anything . ..1-1.5% loss of your capital will be ur max .. no.matter profit ...what it will be .

U won't think about profit .u think about loss only .

 As per ur hunger decide the profit .

 But as per loss . U should know ur risk first 

 How.people are destroyed here .

 Gives 

 I m.putting my example 

 Becoz I know 

 What iam.doing .

 U should lose only Rs 1000(differs from person to person based on his/her capital) in every trade .

 That is ur target 

 If sl is 40 point 

 U will buy 1000/40 = 25 . Quantity only 

 If sl is 2 rs u will buy 500 quantity 

 Hope u understand my point 

 What 

Now 

 Time has taught me this is the highest secret of management 

No matter u r ..prob Rakesh jhunjhunwala or whoever 

 Who ever breaks this rules. Will be destroyed .

Before you put on a trade … 

– Define a stop loss price 

– Define the maximum amount you are willing to lose 

– Define an exit point in case of a winning trade 

– Define a point where you put the risk to break-even Plan your trade, trade your plan!