lets take the above stock for example. say i have a risk appetite of 2% which is 2000 and my capital is 1 lakh. it means i do not want to bear a risk more than 2000. my stop loss is 3 rs away from my buy price (bpcl- 378-375=3) i can pick 666 stocks- (2000/3) and if this transaction hits stop loss my max loss = 666*3=1998.
say i go all crazy and buy 1000 qty and if the above trade hits stop loss, my loss wud be 3000. which is more than my loss appetite.
so yea, dont pick too many share. always calculate ur risk before u calculate ur target/profit.
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