My journey in the stock market as a day trader was stared like the 70% of day traders.
I started at the age of 17 as an investor, then I come to know that okay there are something like swing and we can make money from it as well and it is more profitiable than doing long term investment.
Then after a month I come to know about day trading, that okay there’s something like day trading and in this daily we can double our capital from the market.
As usual I start getting calls from advisory companies that you can join us. I will double your capital every single day and you can make daily 10-20k easily from the market.
And once again as usual In starting I joined some telegram channel those who shows their accuracy is 99%.
In my starting days I made some profits then after I keep lossing and lossing.
There was a day in my life when I lost my 28.5k in a single day. Almost of 70%+ of m entire capital.
Now slowly and steadily after smalls wins and big losses I come to learn about money management.
I was randomly scrolling on the YouTube. And I got a video related to money management and risk management.
I readied a lot of books related to pshycology money management and discipline.
Now 4 most important things that have leaned and which helped me in safeguarding my capital.
I am going to share with you that I have learned about after reading a lot of books, watching a lot of YouTube videos and most importantly by taking a lot of wrong trades.
Now let’s dive in, 5 Risk management key rules to focus on to safeguard your capital.
- Risk per trade should be maintained.
- Whenever you are trading, You have to trading according to the capital you have. Not the profits you want.
- Lets take an example: You have 20k money in your trading account. So maximum risk you have to take is of 3-55 maximum. Not more than it in a single trade.
- 5% of 20,000 is 1,000 so your maximum risk should be of 1,000.
- Now if you are taking 3 trades every single day. Your risk per trade should be of maximum 300rs.
- Risk per day maintained.
- You have to maintain your risk per day. It is similar to the above but in market rules are rules and you have to follow them strictly.
- So whenever you are trading make sure that your risk per day should also be maintained.
- Like what most of us do we completely ignore and then out from the market.
- Maximum 2 stop loss in a day.
- Firstly, You have to put stop loss in every trade. No matter anything happened. Your first priority after taking a trade is put stop loss.
- And on every stop loss you have to feel pleasure that okay your stop loss is taken by the market and now you are out from the situation to losse more.
- Also the important rule which have to focus on is that – You will not trade once 2 SL gone for the day. In any situation, Any big opportunity once 2 times your sl taken for the day. Close your system for that day.
- Correct position sizing.
- After reading the subheading – might you not better understand this. Let’s take an example.
- Currently the price of Axis Bank is 750. You will get the leverage upto 10X. Means if you have 20k you can buy 250+ quantities.
- Now many of you will start thinking okay I will buy 250 quantities of 750 and I will put the stop loss of 1pt. Then then I will be able to get the maximum from the trade.
- Nope, You don’t have to do like this. First of all you always have to put a logical stop and then you have to do your position sizing.
- Like if your stop loss is of 4pts in this case and maximum you can bear the loss of 350 every trade then you have to not take more than 75quantities.
All these are the thumb rule for your trading success. You can be a successful more over a profitiable day trader when you will follow all the rules very strictly.
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Here one more point I have included for you as a bonus point.
- Logical Stop loss placement.
- You have to make sure that your stop loss should must be logical, you will put stop loss a/c to the price action only.
- If stop loss is going bigger in any case you will not take that trade. Like example you can see above In jinadal steel a/c to my set-up entry time is 10:45 but my stop loss is so big of around 13pts.
- Actually it is not big for the stocks of price more than 2000, but its price is under 400 and 13pts. Risk in that case is really very big.
So you have to put the logical SL – Not so big not so Small!
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