Points to remember to reduce risk. Please find the below example

VEDL

BUY above 302.40,  Target1 – 305.40, Target2 – 309.65, SL – 300.90
SELL below 295.15, Target1 – 292.15, Target2 – 287.90, SL – 296.65

#1. In this example, our risk is 0.5% of the stock value and reward is more than 1 % of the stock value.  So we want to trail the stop loss to buying price once the stock reaches more than 0.7 percent from the buying price.

#2. Now our Risk is Zero. So ready to book profit if it move above 1% of your buying price.

#3. Always book profit more than or equal to 1%.

#4. Fortunately ,If you book more than 3% of profit means, you are in the profit zone for next 6 consecutive trade. If you confuse in this ratio please see the below example.

Capital (10,000 worth stocks) Profit Loss
Day 1 300
Day 2 -50
Day 3 -50
Day 4 -50
Day 5 -50
Day 6 -50
Total 300 -250

#5. Always do trade for  one month, because cumulative profit and loss only end up in profit as listed above.

#6. Don’t take leverage, because it will ruin your risk and reward calculation end up with loss.

#7. Always do with your capital and set up a weekly goal.

#8. Be positive always don’t insert more indicators in your chart because nobody knows what is going to happen in upcoming hours. We always focus to reduce risk from our trade that is first step to prevent from losses.

#9. Don’t put target order while enter into the trade.Trail your stop-loss to achieve your target. Say for example, if stock moves  6% of your buying price if you put the target 1 price as limit price means then we missed the biggest move of the month. 6% of amount will prevent from 12 consecutive stoploss order as stated above.

#10. Don’t trade on news stocks and don’t revenge on markets.

If you have any doubts regarding this section please feel free to ask in the comment section. Happy Trading 🙂

Categories: articles

1 Comment

Narasimha Reddy K · March 9, 2018 at 4:42 am

Newly I am entering in to stock market. Still I did’t understand the example u explained above.
BUY above 302.40,  Target1 – 305.40, Target2 – 309.65, SL – 300.90
SELL below 295.15, Target1 – 292.15, Target2 – 287.90, SL – 296.65

could please explain in depth above example.

Leave a Reply

Your email address will not be published. Required fields are marked *

Social media & sharing icons powered by UltimatelySocial