Risk Management

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Risk Management

Risk management is the management of risk inherent in trading by identifying these risks, assessing them and knowing how to control them. You can't control how much you may profit on each trade, but you can control how much you may lose. Poor risk management is one of the top reasons traders fail. Managing your risk exposure, by knowing what to do and what not to do, helps to prevent deep drawdowns or losing your trading capital. There is a variety of potential risks to take into account.

Good risk management is key to capital preservation and involves thinking about how much capital to employ, how much to risk on each trade, how many trades to make daily, weekly and monthly and what stop levels to use for each type of set-up. Also included in good risk management are what reward / risk requirements to enforce, how to employ money management, how to use a balanced portfolio and how to deal with correlations between open trades. Traders employing good risk management also consider what loss limits to set daily, weekly and monthly, how to calculate the overall expectancy of your trading strategy and how to avoid the risk of ruin.
vanathi vanathi TOP BANKNIFTY, 60, Education
BANKNIFTY: Newbie's Corner!
832 33 26
BANKNIFTY, 60 Education
Newbie's Corner!

Few of my friends here have started to think that I have forgotten Newbie's corner. I write, when I get some valid query. So here come a new question. Query : I have been trading for 4 yrs, I have learnt all technicals but still I am losing money. I dont know why. Answer : There are two possibilities. One is not knowing/learning technicals properly. People learn ...

indiamarketoutlook indiamarketoutlook IDEA, 30, Education
IDEA: Idea: Important Lessons to be learnt
117 1 2
IDEA, 30 Education
Idea: Important Lessons to be learnt

Greetings of the day...!!! Sharing one case where we almost paid the penalty of not listening to chart... Some days earlier we recommended a short in idea around 78 for targets of 76 and 74 https://in.tradingview.com/chart/IDEA/r5MyVhgz-Idea/ Things were going good and our 1st target was achieved within hours.... Booking partial profits when target 1 was ...

neneram neneram NIFTY, W, Education
NIFTY: Trading - Risk Management
181 15 7
NIFTY, W Education
Trading - Risk Management

Hi , All the post are on trading /technical analysis. So thought of putting something on risk management . What is Risk Management ? Now don't look blank, if your in markets you have to know about it. Does every trade has risk and Is quantum of profit assured ? Yes every trade comes with risk and no assurance of profit. How much risk can you take ? Lets ...

dravya dravya NIFTY, D, Education
NIFTY: Weekly Educational Series - PART 2
279 16 7
NIFTY, D Education
Weekly Educational Series - PART 2

---------- Continued from Weekly Educational Series - PART 1 ; ---------- 3. Expectancy So, now we have got our risk reward ratio and winrate. We move on to calculate the expectancy of our trading strategy. The formula is, Expectancy = (Probability of Win * Average Win) – (Probability of Loss * Average Loss) So, in our scenario, where, Risk Reward ...

dravya dravya NIFTY, D, Education
NIFTY: Weekly Educational Series - PART 1
282 4 7
NIFTY, D Education
Weekly Educational Series - PART 1

For the benefit of other traders, I am starting a weekly educational series where i will be covering lots of topics related to trading which everyone should abide by. It will be in simple language and easy explanation so that everyone can understand. There will be further detailed explanation of nuances if required by the members. So, starting with the first ...

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