Effective risk management is essential, even before planning a trade. Correct position sizing plays a critical role in this process. Many new traders overlook this fundamental principle and consequently face significant losses. In this short video, I explain how to apply it effectively.
The principle of not putting all your eggs in one basket may sound cliché, but it remains a vital element of stock investing. Diversification can serve as a safeguard if the market moves against you.
Always plan your trade and trade your plan to minimize emotional decision-making and maintain discipline in your trading strategy.
Do a proper research on the stock that you are about to buy.
Input the capital that you currently have and you are ready to trade with.
Very important step is to set your risk, enter the % of your capital that you are ready to lose incase the trade does not workout in your favor.
Input the price of a stock that you are willing to buy at.
This is the price or the sell order that you will fix in case if this trade/investment does not go as per your plan.
Now you will get a figure in position size box where it will show you that you can buy a particular number of share with the criteria that you have just put in. It will also show you the amount needed.
