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I have been asked question on how I manage these many positions and whether it is right or not. So, I am penning it down here, so this will answer if you had similar question and I can use the same post to answer others who ask me same question.

First thing – There is nothing right or wrong in market and we cannot be rigid with anything. Some things work in trending market and are not that good in sideways or down trending markets, so we need to adapt.

Having many position in a bull run is good as per my experience but then I always manage my risks (remember the bull run we saw in last few months will never be same always).

Here is what I am doing (Many other might think or suggest otherwise but that’s okay, I have a respect for everyone’s opinions). Also, I have not learnt this from anywhere (someone might be doing same too but I am not aware).

I created this strategy for myself purely based on my observation and experience, so whether you adapt that or not is entirely your choice:

  1. For first 10 position, I risk only 5% of my total capital and max loss in each postion can be 20% (logically, 20% is the circuit right??). So basically my max risk in any trade is always below 1% (understand this maths).
  2. Once I have 10 positions, I look at my remaining balance and deploy only 10% of remaining capital on every single trade and keep on doing that. If you look overall, this will be 5% only of total capital at start and will keep on decreasing along with your risk also.
  3. Now advantage with this is : If your existing positions are not giving profits, your capital will not increase and any position you take increasingly will have lesser and lesser risk.
  4. At any point of time, your max risk on total capital will not go above 20% whatever be the case if you follow this properly and even if you hold 100+ positions.
  5. Also, I book only 75% positions at target. Once i have booked 75% positions, I already have made a profit on that trade, so i do not worry much above rest 25% if they are trading above buy price. These 25% will be the actual wealth creator but you will understand it only when you have experienced it, and psychologically they will be easy to hold for two reasons – first is that, you already made a profit on that trade, second is that, these are only 25% of your position size.
  6. How to manage these many entry and exits?. I used to have a paid software to execute trades at 9:15 but now we don’t need that anymore as there is GTT. Learn about GTT. I am using GTT for buying, selling, stoploss and almost for every trade on stocks. GTT is a boon for all part-time traders. Just keep the trade and forget it.

All who are actively trading will probably understand this but if you do not understand the essence, its okay. Whatever you do in market, just make sure you are managing your risk.

One comment

  1. Very useful article, I read couple of times and understood the concept “How to deploy the Capital & Mange it”. Its a Timely learning for me as I just started the swing trades.


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