Hello All,
I'm finally in the last leg of defining my rules for trading . I have done ,swing , scalping , long term investing and have been successful with all of them . But i am picking scalping cause there are many opportunities available in the day .
K so , I have developed a money management system can seniors plz tweak and comment so I can get my money management rules done with :
My capital is going to be 50k
1. For every 30k in the account = 500 shares .
As 1 lot in futures generally costs around 19k-25k . giving me a 5k cushion.
2. My stop loss will be at 0.35% of the price (i.e 400rs share , SL will be 1.4 rupee lesser than entry)
3. My target will be 0.5% of the price (400rs share , SL will be 2 rupees more than the entry)
4. If target is not achieved then , 0.3% from the current high will be my exit
(so , 401.5 is the highest it goes , then my exit will be 400.29) , hence giving me a very very small profit but making sure the trade doesnt turn into a loss making one
5. No over night holding . As my account balance is too low for that . Will not be able to hedge and earn effectively .
Bottom line :
*target Risk/Reward ratio of : 0.35/0.5 = 0.7.
* position sizing is as follows :
for every 30k i will be adding 500 shares for each position :
so 30k = 500 shares lot size (thanks to nse to break a couple of my stocks down to 500/lot) .
so assuming a 400 rupee share possible drawdown (if i stick to my rules) :
is 650rupees .
and possible profit on a trade : 1000 rupees .
(brokerage , Is extremely low , so not even taking into consideration)
As of now , I have been able to come up with these rules . I will start paper trading from FEB1st , after my backtesting phase which starts from 25 to 30th of jan .
Would be awesome , if experts and seniors can comment below .
(I know its hard to follow rules and blah blah blah ... I am expecting these kind of comments , so wanted to clear things up . I believe in statistics . As long as my method gives me a 50% success rate or above I am fine .)
Awaiting guidance ,
HedgeFudge
I'm finally in the last leg of defining my rules for trading . I have done ,swing , scalping , long term investing and have been successful with all of them . But i am picking scalping cause there are many opportunities available in the day .
K so , I have developed a money management system can seniors plz tweak and comment so I can get my money management rules done with :
My capital is going to be 50k
1. For every 30k in the account = 500 shares .
As 1 lot in futures generally costs around 19k-25k . giving me a 5k cushion.
2. My stop loss will be at 0.35% of the price (i.e 400rs share , SL will be 1.4 rupee lesser than entry)
3. My target will be 0.5% of the price (400rs share , SL will be 2 rupees more than the entry)
4. If target is not achieved then , 0.3% from the current high will be my exit
(so , 401.5 is the highest it goes , then my exit will be 400.29) , hence giving me a very very small profit but making sure the trade doesnt turn into a loss making one
5. No over night holding . As my account balance is too low for that . Will not be able to hedge and earn effectively .
Bottom line :
*target Risk/Reward ratio of : 0.35/0.5 = 0.7.
* position sizing is as follows :
for every 30k i will be adding 500 shares for each position :
so 30k = 500 shares lot size (thanks to nse to break a couple of my stocks down to 500/lot) .
so assuming a 400 rupee share possible drawdown (if i stick to my rules) :
is 650rupees .
and possible profit on a trade : 1000 rupees .
(brokerage , Is extremely low , so not even taking into consideration)
As of now , I have been able to come up with these rules . I will start paper trading from FEB1st , after my backtesting phase which starts from 25 to 30th of jan .
Would be awesome , if experts and seniors can comment below .
(I know its hard to follow rules and blah blah blah ... I am expecting these kind of comments , so wanted to clear things up . I believe in statistics . As long as my method gives me a 50% success rate or above I am fine .)
Awaiting guidance ,
HedgeFudge
