Risk Management and Position Sizing

Success in trading doesn't come only from making profits—it comes from controlling losses.

Risk Management:

This means deciding how much loss you're willing to tolerate on each trade.

Position Sizing:

This refers to how much of your capital you allocate per trade, so that even if you face a loss, it doesn't significantly impact your overall portfolio.

A simple rule: Risk only 1–2% of your total capital on a single trade.

For example:

If you have Rs. 10,000, risk only Rs. 100 to Rs. 200 per trade.

To do this effectively, always use a stop-loss to make sure your loss doesn’t exceed a certain limit.

Why is a stop-loss important?

Because not every trade will be successful. But a trader who controls their risk can stay in the game long term.

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