Trading Styles & Risk Management

Discover which type of Trader you want to be

Before entering into the stock market, you should identify yourself which means you should determine whether you are an investor, a day trader, a swing trader etc.

If you want to trade for day and you are ready to accept the wild swings, sudden volatility and impulsive moves of the index then you can opt for day trading which is also known as Intra-Day Trading.

Day trading is a risky business as it contains sharp upside or downside moves depending on the market you trade. But with proper understanding and risk management system you can excel in this too.

Risk Management

Risk Management means basically following a 1% rule which I strictly follow as well.

So what 1 % rule tells us is that if we are day trading then we should risk only 1% of the total capital or amount that we have invested. For example let's say you have invested Rs.1,00,000. Then you must take risk of only Rs.1,000. (1% of 1,00,000 = 1,000).

In this way if your trade goes on wrong side then you will lose only 1000 rupees and you still remain with 99,000 for coming days. 

Imagine you traded with excitement and lost 10,000 on the first day i.e. in single day. it means that you have lost 10 day's of capital in one day. That's why risk management is necessary.

The method you adopt depends on your personal preference and profile.

I am attaching an image which can explain trading styles in easy way.


 In the next blog we are straightly heading to what is the Chart and it's use.


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