Understanding Risk-Management

anandlive Updated   
The stock is trading at lower prices if you see last month's movements. In the last few days, it formed a double bottom
and again came down to lower levels. If reverses from these levels, a bull run may come.
The risk-reward ratio is good at this point.
1. If we enter at 940 while considering the stop-loss at 860 - the loss will be 60 points.
2. If prices go in our desired direction, the final target comes at 1500 - the profit will be 560 points.
So we have to keep our position size in a way that if we have to exit at a loss, that should be manageable for us.
This means we should be ready for that loss. Else while going in profits, we may exit at the first target of 1140.
Let's calculate the quantity of 25.
If we have to exit at a stop-loss of 860 - the loss will be 2000.
If the price reaches the first target of 1140 - the profit will be 5000
if the price reaches the final target of 1500 - the profit will be 14000
We should always keep our position size in accordance with our risk capacity.
Risk management is a general concept in every aspect of our life and normally we follow this other than the stock market.

Only for learning and sharing purposes, not a bit of trading advice in any form. Please do your own analysis before taking any trade or consult your financial advisor.
All the best.

Moving well
Understanding the trade setup -
We may change the exit price to below 890.
Keep tracking. Crossed 1000.
Bounced back nicely today.
Reached the first target of 1140. Keep tracking. All the best.
According to the changed setup with time, there may be a quick upside movement if crosses 1145. Stay tuned.

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