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Intraday Risk Management Guide

The document outlines a comprehensive intraday risk management guide for trading in Nifty and Bank Nifty, emphasizing the importance of risk management as a key skill for long-term success. It presents five golden rules for managing risk, including limiting losses per trade, defining stop losses, maintaining a minimum risk-reward ratio, setting daily loss limits, and calculating position sizes based on stop loss distances. Additionally, it highlights common trading mistakes, successful habits, and provides a daily trading plan template to enhance trading discipline.

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5 views3 pages

Intraday Risk Management Guide

The document outlines a comprehensive intraday risk management guide for trading in Nifty and Bank Nifty, emphasizing the importance of risk management as a key skill for long-term success. It presents five golden rules for managing risk, including limiting losses per trade, defining stop losses, maintaining a minimum risk-reward ratio, setting daily loss limits, and calculating position sizes based on stop loss distances. Additionally, it highlights common trading mistakes, successful habits, and provides a daily trading plan template to enhance trading discipline.

Uploaded by

gvincent.sk
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Intraday Risk Management Guide

Complete Framework for Capital Protection in Nifty & Bank Nifty

1. Why Risk Management is the #1 Skill


Most traders focus only on strategies and entries. But the traders who survive and grow in
the long run are those who master risk management. Even a 40% win rate strategy can be
profitable with proper risk management.

2. The 5 Golden Rules of Risk Management


Rule 1: Never risk more than 1-2% per trade
If your capital is Rs. 1,00,000, your maximum loss per trade should be Rs. 1,000-2,000.
This ensures no single trade can destroy your account.

Rule 2: Define your stop loss BEFORE entering


Place your stop loss at a logical level (below support, above resistance) — not based on
how much money you can afford to lose.

Rule 3: Minimum 1:2 Risk-Reward Ratio


For every Rs. 1 you risk, your target should be at least Rs. 2. This means you can be right
only 40% of the time and still be profitable.

Rule 4: Set a daily loss limit


If you lose 3% of your capital in a day, stop trading. Come back tomorrow with a fresh
mindset. Revenge trading destroys accounts.

Rule 5: Position sizing based on stop loss distance


Calculate your quantity based on your stop loss — not randomly. Quantity = (Risk Amount)
/ (Entry Price - Stop Loss Price).

3. Position Sizing Calculator


Use this formula to calculate the correct position size for every trade:

Parameter Example
Total Capital Rs. 2,00,000
Risk per trade (1%) Rs. 2,000
Entry Price (Bank Nifty) 45,000
Stop Loss Price 44,800
Stop Loss in Points 200
Lot Size (Bank Nifty) 15
Risk per lot 200 x 15 = Rs. 3,000
Number of lots 2,000 / 3,000 = 0 lots (skip trade)
Correct Action Reduce stop loss or skip trade

4. Trading Psychology & Discipline


Common Mistakes Traders Make:
• Moving stop loss further when trade goes against you
• Averaging down in losing trades (adding to losers)
• Over-trading after a big win or big loss
• Trading without a plan — random entries based on tips
• Ignoring stop loss because 'it will come back'

Habits of Successful Traders:


• Follow the trading plan — no impulsive trades
• Accept small losses quickly — let winners run
• Keep a trading journal — review every trade
• Trade only high-probability setups — quality over quantity
• Take a break after 3 consecutive losses

5. Daily Trading Plan Template


Time Activity
8:30 - 9:00 AM Calculate CPR, mark PDH/PDL, check Gift Nifty
9:00 - 9:15 AM Identify key support/resistance zones, plan setups
9:15 - 9:30 AM Observe market open — do NOT trade in first 5 minutes
9:30 - 11:30 AM Best time for breakout and trend trades
11:30 - 1:00 PM Slow period — reduce position size or avoid trading
1:00 - 3:00 PM Second trending period — trade with trend
3:00 - 3:30 PM Avoid new trades — close open positions
After 3:30 PM Review trades, update journal, calculate P&L

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