Regards

Saint

Hope You all find it useful

Thanks and Regards
manoj

A new innovation may help traders to be more diciplined in proper position sizing and taking the Stop Loss everytime it is triggered.

The details of the product not yet realized, but we can have a sneek peek at it.
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Thanks, for clarifying further… great post..:)

Regards,
Prasun

As I read in one of the above posts, that if you have 2% risk already been taken in Nifty you can diversify by putting another 2% in ABAN, LT, etc. Sorry to say it guys but this actually is total Money -mismanagement as Nifty and other stocks tend to move mostly in same direction. Now suppose, you went short on Nifty with 2% capital and other 8% is used to go short in say ABAN, LT, HDIL and JP, what if market starts moving up and takes stops on all the stocks, where are you left with 10% loss to your portfolio in a single day, think of 2 -3 consecutive losses which are very common and you may be down nearly 30%, thats totally unacceptable.

First of all, frankly 2% is too much for a 60 min. flow trade, in my view 1% is adequate, if you dont ave adequate capital go for Minifty and slowly graduate to Nifty.

Secondly, if you need to Diversify, go to other markets like Currencies, Gold, Copper, Crude, etc. these are all loosely related and positioning yourself here gives you actual Diversification.

And last but not the least you need to have a Monthly Risk %, i.e. if you loose say around 10% in any given month, you should immediately stop trading. Now think of it, if you take 2% hit on every trade in 60 min. method how many months you will have where 10% Monthly loss will be hit, I suppose many. So dont stretch beyond 1%.

Money Management is all that there is to loosing and winning in markets, its better to chase the best Money Management systems rather than Entry/ Exit methods, that will make sure we emerge a winner

Thanks Prasun & MJ

U both have cleared my doubts.So without 2.5 laks we should not even trade in mininifty.
So as per Prasun ex:
With 10L we take 5 lots of nifty.so we use alost 1L for it.so what can we do with that remaining 9L.
can we take 5-10% risk instead of 2% ,so we can trade more lots.

mmm..coming across this question very often now.
Forget about usage of money, how much capital is blocked etc…

In my humble Opinion Srini

With 10L, and 1% risk…you can risk no more than 10,000 per trade….thats the end of it.
IF trading 3 scrips, then thats 30k. Close case. Dont think about, margin, or remian 8L or 9 L…

We calculate on total cap.

MJ-

Thanks Prasun & MJ

U both have cleared my doubts.So without 2.5 laks we should not even trade in mininifty.
So as per Prasun ex:
With 10L we take 5 lots of nifty.so we use alost 1L for it.so what can we do with that remaining 9L.
can we take 5-10% risk instead of 2% ,so we can trade more lots.

Srini,

The basic idea of MM is to not to deplete your capital if you are having a string of losses.
Suppose you get a loss of continuous 5 trades, with 5% equity loss in each…. you will be down 30% from your actual Sum.

But what about the adds, Say when trades move in your favour.. and your risk points after moving your SL is 0, then you can take a add of 5 lots again if your SL is that far.

So after a full trades with about 3 adds etc… you will have used up lot more that 1L as margin.

Another thing is, trade another counter for 2% risk… say RIL, LT , ABAN .. anything.
That way you can have 2% risk per trade and overall may be 10% risk and you will use your capital to full if you go with all the adds…:)

Regards,
Prasun

U both have cleared my doubts.So without 2.5 laks we should not even trade in mininifty.
So as per Prasun ex:
With 10L we take 5 lots of nifty.so we use alost 1L for it.so what can we do with that remaining 9L.
can we take 5-10% risk instead of 2% ,so we can trade more lots.

The loss i got today was Mainly due to wrong money management.adding to loss making position(averaging).

IN simple example can any one say how much %risk can be taken for a 1 nifty lot,capital required etc.
pls help needed.

Srini,

I am pitching in, hope others ST doesn't mind.

Lets take an example, say of 60 min trade (dummy) :

say we are to reverse to short now, our entry is say at 2900, and stop loss at 2975 (including filters everything).

entry = 2900
SL = 2975

Risk = 2975 - 2900 = 75 points.

Now, lets say we have 10L, and we want to risk 2% per trade.
So, 2% of that is 20,000/-

Now, with a risk of 75 points how many lots should we buy

20000/75 = 266.66 shares, or 5 lots.

This is a simple way to calculate before entry.. you can calculate it in the reverse order also.

Regards,
Prasun

The loss i got today was Mainly due to wrong money management.adding to loss making position(averaging).

IN simple example can any one say how much %risk can be taken for a 1 nifty lot,capital required etc.
pls help needed.

1 lot NF with 100pts risk = Rs 5,000
1% risk
Capital required = 5Lakhs.

MJ-

IN simple example can any one say how much %risk can be taken for a 1 nifty lot,capital required etc.
pls help needed.

Hello
I have a very basic query on MM.
Suppose my trading cap is 10L. I take a trade on nifty using 2% risk, doing the maths based on SL it is calulated that my initial posn will be 2 LOTS.
To trade in 2 Lots suppose the margin amount that is blocked is 35K.
Now another trade comes into my way and I wanna take it. So now when I do my maths what shall be my trading cap does it remains the same 10L or is it now 10L-35K.

KomaL

Your capital is still 10 L ,Komal,but now you already have 2 lots position entered at a particular point.You have to decide the total risk you are willing to take on all positions put togather .If it is 2% and your stoploss in original nifty position is not moved in your favour so far,then you cannot take the fresh trade…
Many traders have two limits 1) Max amount that can be risked an a trade 2) Max amount that can be risked taking all open positions taken togather. This is necessary as in case of sudden reversal and all trades hitting the stoplosses,one does not go belly down .

Best Wishes,

Smart_trade

Thanks everyone.
Avinash

Hello
I have a very basic query on MM.
Suppose my trading cap is 10L. I take a trade on nifty using 2% risk, doing the maths based on SL it is calulated that my initial posn will be 2 LOTS.
To trade in 2 Lots suppose the margin amount that is blocked is 35K.
Now another trade comes into my way and I wanna take it. So now when I do my maths what shall be my trading cap does it remains the same 10L or is it now 10L-35K.

KomaL

Hello Komal

For MM you need to work with 2 percentages, first is Max risk per trade, which in above case you are assuming to be 2%, another limit in % terms will be maximum risk on total position, lets say you trade 5 scrips/tickers including nifty, then you will have a limit on total exposure (thus risk will be 10%).

Now if this 10% sounds excessive to you then limit the number of scrips or reduce the risk per scrip, so maybe 1-1.5 with 5 scrips would be ideal.

Over and above this calculation you also need to consider some special situations like gaps against your positions. Overall without making it complicated we need to ensure that we will stay in the game long enough so that the law of averages works in our favor.

SPAN Margin should be least of your worries, the game is setup in such a way that the average joe/jane will lose. Don't focus on margin, what counts is total capital available for trading and taking proportional risk.

Hope it helps

Thanks
Rajesh

Hello
I have a very basic query on MM.
Suppose my trading cap is 10L. I take a trade on nifty using 2% risk, doing the maths based on SL it is calulated that my initial posn will be 2 LOTS.
To trade in 2 Lots suppose the margin amount that is blocked is 35K.
Now another trade comes into my way and I wanna take it. So now when I do my maths what shall be my trading cap does it remains the same 10L or is it now 10L-35K.

KomaL

MM percentage taken on total available cap. So even if trading 3 scrips and 1% risk then each script's risk is 10,000 Each.

Regards,
MJ-

KomaL