Start with R multiples, profit booking becomes mechanical without emotions. I will explain.
Enter at 200, SL 195. Risk(R) = 5. Risk per trade = Rs.2000
Qty = 2000/5 = 400
1. Book profits on 50%( 200 qty) at 1.6R or greater ( 208) and modify SL to 200 ( entry price) (1/n)
Enter at 200, SL 195. Risk(R) = 5. Risk per trade = Rs.2000
Qty = 2000/5 = 400
1. Book profits on 50%( 200 qty) at 1.6R or greater ( 208) and modify SL to 200 ( entry price) (1/n)
https://twitter.com/stocksharma90/status/1416081799583657986
2. Book profits on next 25% ( 100 qty) at 2.5R( 212.5) and modify SL to 208
3. Last 25% continue chasing with a R trail of 1R below current price
You may change initial book to 2R also. But minimum profit booking has to be 1.6R or above
3. Last 25% continue chasing with a R trail of 1R below current price
You may change initial book to 2R also. But minimum profit booking has to be 1.6R or above
even if you are 50% correct on your trades, this money mgmt logic will give you net profits. Now the system/logic you are trading must have that edge and that R expectation of minimum 1.6R on a trade. Below that, you won't win in the long run
Remember, absolute risk per trade in rupee terms should remain same across all trades. Depending on your SL/Risk, the quantity will vary. You will trade higher qty when SL is low and lower qty when SL/R is higher
The one I have explained above is called the "Fixed Dollar Model" in money management. Start with this and then look at Fixed Fractional, Fixed Ratio etc. I use something called Optimal F which has been developed by Ralph Vince. Also look at Kelly's Criterion
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