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Money Management

 

Money Management

First Learn Money Management then only trade in live market or Stock market, here we are trying to cover some basic knowledge where most of traders make mistakes
Do you know that 69% Traders Don't how to trade using Money Management Principles, and you also can't believe that most of them also don't know that what is money management, they are just blindly trade in stock market or just copy other traders. here we are trying to explain you in very short and crisp language with example.
Now Going to Directly to our Point that What is Money Management in Stock Market. It's very Simple As word itself describe that How to Manage Money in Stock Market so that we can Get Maximum Profit with Minimum Loss.

Let's Continue with Practical Example

We are here going for one practical example of money management which is almost related to all traders. and most of them making same mistakes again and again this. let's do that example
Suppose Mr Ankur is intraday trader and here is today's Trade Report
ScripCapital Invested or QtyProfit/Loss
BATAINDIA1,00,0005000 PROFIT
ICICI BANK1,00,0004000 PROFIT
SUNPHARMA3,00,000-12,000 LOSS
TOTAL PROFIT OR LOSS-3000 LOSS
Here in Mr Ankur Case what's Going wrong?
Mr Ankur Place first Order with 1 Lac capital and he made profit of 5000 Rs, and then after he also place second order with same 1 lac capital and also in this trade he made profit of 4000 Rs. Now Mr Ankur Confidence going up and he is now full of excitement and he feel that he is superior than market and he know everything. So Now he is making order with 3 times more capital of 3 lac rupees and buy more quantity than as usual. and that trade goes wrong direction and his trade ended up with -12000 Rs Loss. Now Overall Loss is -3000 Rs. He place 3 order and 2 order is in profit though he is getting overall loss because of this Over quantity or over confidence.
Now Let's Understand Mr Sanjay's Trade Report
ScripCapital Invested or QtyProfit/Loss
BATAINDIA1,00,0005000 PROFIT
ICICI BANK1,00,0004000 PROFIT
SUNPHARMA1,00,000-3,000 LOSS
TOTAL PROFIT OR LOSS6000 PROFIT
Here Mr Sanjay Traded in Same Scrip, same day and same time. But Mr Sanjay keep same investment or Quantity in all of their trade. And Earn 6000 Rs at end of the day although he made loss in one of them trade.

Hope You Understand This Concept
This is Just One Point of Money Management, we can't cover all points here. You can call us for more details or to learn money management free of cost. we are not charging you for this knowledge and you can also find broad knowledge about money management from internet (Youtube, Articles etc). Before Going to end this topic please keep this point in mind.

  • Don't Trade with Over Confidence
  • Don't Trade with Over Quantity
  • Keep Same Quantity or Investment Over a Period of Time
  • Always Keep Stop Loss
  • Don't be to Greedy when you are in Profit
  • Don't Trade for Recovery of Loss
  • Don't Buy More Quantity to Cut down Buying Price (Average in Loss Position)
  • Don't Keep More Capital Or Extra Capital in your Demat account
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