← Learn
Risk and mindset · 4 min
Stop-loss and position size
Good traders are wrong too. The difference is they keep mistakes small. Two tools for that: stop-loss and position size.
Stop-loss
Decide in advance at which price you'll admit you're wrong and exit. In the app, pick "Stop-loss" in the order sheet and it sells automatically at that price.
The 1-2% rule
Don't risk more than 1-2% of your money on one trade. On ₹1 lakh, the most you lose on a trade is ₹1,000-2,000.
Working out the size
Qty = the loss you can accept ÷ (buy price − stop-loss). For example ₹1,000 ÷ (₹500 − ₹490) = 100 shares.
Quiz (3 questions)
1. Why use a stop-loss?
2. With the 1% rule on ₹1 lakh, max loss per trade?
3. Buy ₹200, stop-loss ₹195, max loss ₹500: how many shares?
This is for learning only, not advice on any stock or trade.