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First Rule Never trade/Invest without stop loss.
Because if you will trade/invest without stop loss you will end up trading or investing, as you will loose all your invested amount.
Second rule is position sizing, Isko explain karte hain, First of you should have a plan or strategy before entering in the market.
So you should decide that this much of capital I am going to invest, let’s assume Rs. 10,00,000 so you should allocate your capital in not more than 10-15 stocks in one time.
Second you should allocate equal money in every stock.
So now suppose you allocate Rs. 1 Lac each in every stock and total stocks are 10 and your total Investment amount is 10 Lacs.
Now Third Rule is Risk Management, Your risk reward ratio should always be greater than or equals to 1:2. Means if you are buying a stock at 100 Rs. and your set stop loss at 90 then your target price should be atleast 120 or more. So agar your target is less than 120 then you should not enter in the trade.
Your Risk per stock should not be more than 1-2% of total capital, means as you invested 10 Lac and in each stock 1 lac and your stop loss is 10% in one stock and then ultimately it is 1% of your total capital.
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