This Thread specially for Beginners like myself to learn Money Management, Risk Reward and Position Sizing.

I will post my experiences here what i did wrong/right, Do's and Dont's.

Everyone are welcome to share their view and make is simple with step by step points to understand, and better to avoid outside links or "no links at all". Just share your experiences. if at all you want to share something apart from your experience, share it as a quote that too please from experiences or quotes from

**"Our Country". There are a lot of wise men in our country.**

I do day trading that too not regularly, i have a job, so i trade only when i get time and proper signals. so i won't be able to post here regularly.

Things i Learned

- Even without any technical/fundamental analysis if you take randomly with 1:2 Risk:Reward ratio, with 40% wins, end of the day we will be in profit. so if we add technical analysis that is called "edge" and that 50% will increase.

To achieve above position sizing is important. we need to continuously trade only with "X" number of shares and not deviate from it. see below:

Do's (Correct Way of trading for consistent profits)

Do's (Correct Way of trading for consistent profits)

Day/Trade 1: 500 quantity, profit - (1000)

Day/Trade 2: 500 quantity, Loss - (500)

Day/Trade 3: 500 quantity, Loss - (500)

Day/Trade 4: 500 quantity, profit - (1000)

Day/Trade 5: 500 quantity, Loss - (500)

**Analysis**

*Total Winning Trades: 2*

Total Losing Trades: 3

So 40% Wins and 60% Loss

Total Profit - 2000

Total Loss - 1500

P/L = 2000 - 1500 = 500

The above figure will give an rough idea how we need to follow 1:2 Risk : Reward ration and trade consistently with consistent position sizing

for ex: if you are trading in Equities then lets say you are going to trade net value of 1 Lakh consistently so how many share we need to buy every time?

stock price = 500.

100,000/500 = 200 shares

stock price = 1000

100,000/1000 = 100 shares and so on...

Total Losing Trades: 3

So 40% Wins and 60% Loss

Total Profit - 2000

Total Loss - 1500

P/L = 2000 - 1500 = 500

The above figure will give an rough idea how we need to follow 1:2 Risk : Reward ration and trade consistently with consistent position sizing

for ex: if you are trading in Equities then lets say you are going to trade net value of 1 Lakh consistently so how many share we need to buy every time?

stock price = 500.

100,000/500 = 200 shares

stock price = 1000

100,000/1000 = 100 shares and so on...

**Dont's (Wrong way of trading and recipe for blowing the account)**

Day/Trade 1: 500 quantity, profit - (1000)

Day/Trade 2: 2000 quantity, Loss - (3000) (after seeing success increased position with greed)

Day/Trade 3: 200 quantity, Profit - (100) (fear got in and reducing the size and taking small profits)

Day/Trade 4: 300 quantity, profit - (80) (little more confidence increased size but taking small profits)

Day/Trade 5: 500 quantity, Loss - (4000) (a little more confidence but traded without stop loss and got frustrated seeing the price going against waited... waited... and finally end up with huge loss )

**Analysis**

*Total Winning Trades: 3*

Total Losing Trades: 2

So 60% Wins and 40% Loss

Total Profit - 1180

Total Loss - 7000

P/L = 1180-7000 = -5820

Total Losing Trades: 2

So 60% Wins and 40% Loss

Total Profit - 1180

Total Loss - 7000

P/L = 1180-7000 = -5820

Best Wishes!!!