Page: 1/2

RISK MANAGEMENT
NO MATTER HOW LUCKY YOU ARE, YOU WILL BE DESTROYED
BY THE MARKETS IF YOU HAVE NO RISK MANAGEMENT

STEPS TO FOLLOW BEFORE EVERY TRADE:

EXAMPLE
1. Determine your Trading Capital. Think as if you are starting a
new business of Stock Markets and determine the amount of
investment. Rs. 1,00,000

2. Calculate 1% of your capital. In any trade, your loss should

NEVER be more than this amount. Even if it's your birthday, you Rs. 1,000
will NOT risk more than 1% of capital on each trade.

3. Fix your Trade Details: Entry Price, Stop Loss and Target.  Buy - Rs. 250
Risk Reward Ratio (RR) should be minimum 1. It means that if SL - Rs. 245
your Stop Loss is Rs.5, then your target should be MINIMUM Target - 257.5
Rs.5. Keep your RR same for EVERY trade. VERY IMPORTANT
RR - 1.5

4. Calculate Quantity to trade.

SL Points = 250 (-) 245
Quantity = 1% of capital ÷ Stop Loss Points
=5
Stop Loss Points = Buy Price (-) SL Price
Qty = 1,000 ÷ 5
5. As soon as you enter into your trade, place SL and Target = 200 shares
orders IMMEDIATELY. Now, just watch the trade. Don't make
any modifications. Max Loss = 200 x 5
= Rs. 1,000

THIS IS MY ATTEMPT TO PROTECT AS MANY TRADERS AS

I CAN FROM WEALTH DESTRUCTION.
DO SHARE THIS DOCUMENT AND HELP OTHERS PLEASE.
Detailed example on next page.

CLASSIC AFZAL LOKHANDWALA

TRADING Mobile Phone: 89807 81995

Email: contact@afzallokhandwala.com
Twitter: afzal_57
COURSE Telegram: t.me/AfzalLokhandwala
 Page: 2/2
Trading Capital : Rs. 50,000
Max Risk Per Trade : 1% of 50,000
= Rs. 500
If you have a capital of Rs. 50,000, then in each trade, you will risk Rs. 500.
If you have a capital is Rs. 2,00,000, then in each trade, you will risk Rs. 2,000

Risk Reward Ratio - 1 Risk Reward Ratio - 2

In each trade, you risk Rs. 500 In each trade, you risk Rs. 500
for a target to earn Rs. 500. for a target to earn Rs. 1000

Keep your RRR same for all the trades. I use 1:1.3 for all my trades.

Let's use RR - 1.5 in our example

In each trade, you risk Rs. 500 for a target to earn Rs. 500 x 1.5 = Rs. 750.

EXAMPLE 1 EXAMPLE 2
Buy Price - 450 Sell Price - 325
Stop Loss - 440 Stop Loss - 350
What should be your Target? What should be your Target?
Loss Points = 450-440 Loss Points = 350-325
= 10 = 25
RR = 1:1.5 RR = 1:1.5
Profit Points = Loss points x RR Profit Points = Loss points x RR
= 10 x 1.5 = 25 x 1.5
= 15 = 37.5
Target  = 450 + 15 Target  = 325 - 37.5
= 465 = 287.5

Quantity to Trade = Max Risk per Trade ÷ Loss Points

Quantity to Buy = 500 ÷ 10 Quantity to Sell = 500 ÷ 25

= 50 shares = 20 shares

Let's cross verify

If Trade Fails, If Trade Fails,

Loss = 50 shares x 10 Loss = 20 shares x 25
= Rs. 500 = Rs. 500

If Trade Works, If Trade Works,

Profit = 50 shares x 15 Profit = 20 shares x 37.5
= Rs. 750 = Rs. 750