How to decide position size for intraday trades?

“How to decide position size for intraday trades?”

 

Are you doing intraday trading and facing frequent losses? The biggest reason for this can be choosing the wrong position size.

In today’s video, we will learn how to decide the right position size for intraday trades so that your risk is reduced and profits are increased. So let’s get started!”

Segment 1: What is position size?

“First of all, let’s understand what position size means.

Position size is the amount you invest in a single trade. Choosing the right position size is very important as it directly affects your profit and risk.”

Segment 2: Formula to decide position size

“There is a simple formula to decide position size:

Position size = (Total Capital × Risk Percentage) ÷ Stop Loss

Total Capital:

“This is the total amount of money you have in your account. Suppose, you have ₹1,00,000.”

How to decide position size for intraday trades?

Risk percentage:

“What percentage of risk do you want to take in a trade? Generally 1% or 2% is considered safe. For example, 1% of ₹1,00,000 means a risk of ₹1,000.”

Stop loss:

“This is the price at which you will exit the trade. Let’s say, your stop loss is ₹10.”

Now, as per the formula:

Position size = (₹1,00,000 × 1%) ÷ ₹10
= ₹1,000 ÷ ₹10
= 100 shares

“This means you should buy 100 shares. This will limit your risk to ₹1,000.”

Segment 3: Things to consider while choosing position size

Market volatility:

“Always choose a smaller position size in highly volatile stocks.”

Use stop loss correctly:

“Always follow stop loss with discipline. It protects you from big losses.”

Capital protection:

“Always keep in mind that your main aim is to save your capital.”

Use leverage correctly:

“Be careful while using leverage as it can increase the risk as well as the profit.”

Segment 4: Live Example (Demo)

“Let’s understand with a live example.

You have a capital of ₹50,000.

You want to risk 1% on each trade, i.e. ₹500.

Your stop loss is ₹5.

About Finance:-

How to decide position size for intraday trades?

As per the formula:

Position size = (₹50,000 × 1%) ÷ ₹5
= ₹500 ÷ ₹5
= 100 shares

“Now you can buy 100 shares, and your risk will be limited to only ₹500.”

Segment 5: Frequently made mistakes

“Trading without risk management.”

“Not setting a stop loss.”

“Using all the capital.”

“Using too much leverage.”

“So friends, deciding position size is an art, which can make you successful in trading. If you choose the right position size, you will not only be able to minimize your losses but also increase your profits.

If you liked this blog, don’t forget to share it. And yes, tell us in the comments which formula you use.

How to decide position size for intraday trades?

See you next time, until then… stay happy and trade wisely!”

How to decide position size for intraday trades?