If your stop losses are getting hit and market goes back in the original trade direction regularly:
Don't place your stop losses based on how much money or points you're willing to lose.
Place your stop losses where market would signal you that your trade thesis has failed.
Don't place your stop losses based on how much money or points you're willing to lose.
Place your stop losses where market would signal you that your trade thesis has failed.
Once you decide your stop loss based on where market would show that your thesis has failed,
then decide how much position you can put on, based on the % of risk you're willing to accept.
then decide how much position you can put on, based on the % of risk you're willing to accept.
If you have 1 crore, and you want to trade 100 lot nifty futures:
You can't decide you will set a 20 point stop loss, coz you're willing to lose only 1500 rupees per lot. (1.5 lakhs in total)
You can't decide you will set a 20 point stop loss, coz you're willing to lose only 1500 rupees per lot. (1.5 lakhs in total)
If the stop loss point where trade hypothesis fails is 50 points away, then your stop loss is 50 points.
Which means, if you want to lose no more than 1.5 lakhs, you should trade only 40 lots (1.5L/(50 pts*75) = 40 lots), and not 100 lots.
Which means, if you want to lose no more than 1.5 lakhs, you should trade only 40 lots (1.5L/(50 pts*75) = 40 lots), and not 100 lots.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
