#FreeTip
The math to do before entering trading:
1) Capital Rs 10 lacs
2) Risk per stock as a % of capital :1.25%, ie Rs 12.5k
3) Per stock max allocation: 12.5%, ie Rs 1.25L
4) Risk per stock as a % of position: Max 8%-10%, ie 12.5k
5) RR - 10%:20% , 1:2 , 12.5k : 25k
...
The math to do before entering trading:
1) Capital Rs 10 lacs
2) Risk per stock as a % of capital :1.25%, ie Rs 12.5k
3) Per stock max allocation: 12.5%, ie Rs 1.25L
4) Risk per stock as a % of position: Max 8%-10%, ie 12.5k
5) RR - 10%:20% , 1:2 , 12.5k : 25k
...
...
6) No. of trades likely during the year : 100
7) Win % : 40%, ie 40 trades
8) Projected End capital : 10L x (1+0.20)^(40) x (1-0.10)^(60) = 26 lacs, ie 164% return
It doesn’t mean that u will necessarily reach the end capital ; U will know if your activity ...
6) No. of trades likely during the year : 100
7) Win % : 40%, ie 40 trades
8) Projected End capital : 10L x (1+0.20)^(40) x (1-0.10)^(60) = 26 lacs, ie 164% return
It doesn’t mean that u will necessarily reach the end capital ; U will know if your activity ...
...
during trading is statistically feasible. For Eg, during trading u observe that u are getting 1:1.5 RR and not 1:2, then , the above calc leads to -52%; U get to know your activity is economically not feasible. For Eg, u observe after a few trades that your win % is ...
during trading is statistically feasible. For Eg, during trading u observe that u are getting 1:1.5 RR and not 1:2, then , the above calc leads to -52%; U get to know your activity is economically not feasible. For Eg, u observe after a few trades that your win % is ...
....
30% and not 40% as originally planned. All else equal this will lead to -57% return; So u can think of adjusting other variables, ie, RR. By changing RR from 1:2 to 1:2.5, return goes to 45%; This gives u an idea of wat type of trades to look.
This calc is very important.
30% and not 40% as originally planned. All else equal this will lead to -57% return; So u can think of adjusting other variables, ie, RR. By changing RR from 1:2 to 1:2.5, return goes to 45%; This gives u an idea of wat type of trades to look.
This calc is very important.
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