All language subtitles for 1. Intraday Risk Calculator Concept

Hello, traders in this session will be discussing about intraday risk calculation concept, I believe

that this is the most important topic every trader has to know.

This concept is my golden ticket.

Following this has helped me be more disciplined while trading at the same time.

It has made me profitable.

If someone had taught me this concept during my early days of trading, I would have achieved my gold

more quicker.

Traders, trust me, this is going to be very useful for you.

Before we discuss about intraday risk calculation concept, I want to speak about the concept of stop

loss as a very important topic our traders has to know.

I will try to explain this topic as simple as possible with an example.

OK, basically what stop losses, stop losses, nothing but setting up your risk bearing capacity in

a trade.

Correct?

Let us see.

I have three rupees in my trading account and I invested this entire money in a trade before entering

the trade.

I calculated my stop loss and the stop loss for the trade was around ten thousand rupees.

After entering the trade, let's say the market went against me and I lost the trade.

Now tell me, will I lose the entire three rupees which I have in my trading account, or will I lose

ten thousand rupees?

Of course, if I keep Stop-Loss as rupees ten thousand, the maximum I will lose is ten thousand rupees.

The remaining two ninety thousand will be that in my trading account.

Right.

Likewise, if I lose one more trade with the capital of two like ninety thousand keeping eight thousand

as my stop loss, the balance capital will be to like eighty two thousand.

Right.

This capital is still intact in my trading account.

Correct.

So it is very important to determine the stop loss before you enter a trade as per your risk appetite.

At the same time, we need to understand that if you want to make profit in thousands, then your stock

losses will also be in thousands.

Have you seen anyone investing one thousand rupees and making one like rupees in a single trade and

especially in intraday?

It's not possible trade, so there is always risk involved and trading.

You might have seen a lot of traders posting video on public domain stating that they have made a profit

of five or 10 lakh rupees in a single trade.

When we see those videos, we only see the profit that they have made.

But have we ever wondered what is the risk appetite to make philanthropy profit?

They'll arrest at least two to three black rupees.

No trader has ever been one hundred percent accurate in the stock market.

There will always be those trades in which the market will go against you and it will stop loss.

So it's very important for us to understand the risk that is involved in every single trade we take.

I completely agree losing money is a disaster.

The day I started planning my disaster first and then trade, I was able to trade with peace of mind.

So every time I trade, the first thing I decide is my stop loss.

I have made it a habit to tell myself that today the maximum loss I can bear is only this much amount.

No matter how tempting the market is, I will never lose money more than my pocket.

For example, if my risk bearing capacity portrayed is maximum five thousand rupees at any cost, I

will not lose more than five thousand rupees on a trade.

Making profit is very important, but defining our stop loss is 100 times more important if you make

profit in the stock market.

Obviously that money will fall into your bank account and of course it will make us happy.

At the same time, losing money about my risk appetite will for sure make me miserable and emotionally

stressed.

There are always winning trade and at the same time there are going to be losing trades.

We need to accept that, learn from our mistake and keep on improving ourselves so that we get better

every day in trading.

That is the same thing in all the field, right?

We need to learn from our mistakes and then we need to improve ourselves.

Traders, I hope you're getting my point here.

Now, let me tell you my story.

In the year 2013, someone very close to me told me to invest in the stock market, saying that I can

double my money very quickly.

So I got excited and started investing in some of the popular companies stocks.

At that time, I didn't even have an idea about fundamental analysis, technical analysis, or did they

even know that there were charts this past?

One day I get a call from my stockbroker and he told me the stock in which I invested is going down

and I have lost twelve thousand rupees.

I was working in a company at that time and my salary at that time was twenty thousand.

How much?

Twenty thousand.

Now imagine a person whose salary is twenty thousand per month has lost twelve thousand rupees in just

one day.

Traders trust me, that was the worst month of my life.

It might look like a small amount now, but at that time it was terrible.

It was a big loss for me.

Only after that event I decided that I will learn trading the right way and never, ever in my life

I will trade beyond my pocket size.

Traders, I want you to understand this.

The market will always try to attract us.

It will cause a lot of positive things, like if you compare the price of the stock during the opening

market and the closing market, the stock price would have been increased to three to five percent.

Even I have fallen for this trap and I was thinking all these options are so cheap, just three, four

rupees.

I should have entered the street.

I would have made twenty five to thirty percent profit.

And I used to think I saw this breakout, but still I did not take the street.

I should have bought one lot of futures of the stock.

We think like that.

Right.

But the reality is after market hours, anybody can say anything.

But in the labor market it's completely a different situation.

Our emotion will come into play because we have reached more among the our pockets, isn't it?

I suggest to you not to fall for this trap, the concept to which I'll be teaching you today.

I personally follow this.

No matter what happens when I'm in profit or loss, I follow this rule.

Even after so many years in the stock market, I am still able to trade just because I followed this

concept.

Now, without further delay, let us get started with the concept intraday risk calculator concept.

I will explain this calculation with an example.

You can make changes to the calculation according to your financial situation.

OK, so let us start.

Let us see.

Mr. X salary per month is fifty thousand rupees and as a monthly expense, including his rent and food

expenses is equal to thirty thousand rupees.

This is for us present security.

So month on month he needs thirty thousand rupees.

To manage his expenses of OK, now traders tell me, don't you think Mr. X has to secure his future

as well, apart from that during his present, like investing in a long term mutual fund or SIPC or

saving fund for his retirement, and especially during this great pandemic, don't you think he needs

health insurance so a person has to invest at least 20 percent towards his future or else it's going

to be very difficult.

Right.

So 20 percent of Mr. X salary is ten thousand rupees.

So we will see this.

Ten thousand rupees as far as future security.

OK, so from 50000 monthly salary, 30000 rupees is going for Mr. X's present security and ten thousand

rupees for his future security.

And the balance that he will have after all those expenses is ten thousand rupees.

This ten thousand rupees will be Mr. X's monthly risk capital.

Remember this?

Ten thousand rupees is not his capital.

This ten rupees has a maximum amount of money he can lose in a month while trading, for example, in

the month of September.

That target is right out of the 30 days.

Let's say there are only 20 trading days.

The remaining 10 days, let's say it was weekend or public holiday, anything as such.

So we have only 20 trading days for the month of September.

And if Mr. X decide to take only one trade per day, that means he will have 20 trading sessions.

Right.

So now what is Mr. X's risk appetite?

His risk appetite?

Bomont, this ten thousand rupees.

So he has to divide this ten thousand rupees by 20 because he is taking only 20 to it.

Right.

And the risk appetite per month is ten thousand rupees.

So when you divide this dangerous five hundred rupees, this five hundred rupees is the maximum amount

of risk he can take.

But trade, ok, if Mr. X decides that he will take only 10 trades statement, that means ten thousand

divided by ten trades per month.

That is a thousand rupees.

So the maximum amount of risk he can take portrayed as one thousand rupees.

OK, traders, I hope you're getting my point here.

If Mr. X is taking 20 trades per month, then is the risk appetite is five hundred rupees.

Now for him to decide how much quantity he needs to trade, he needs to follow this method.

Five hundred rupees.

That is his risk appetite.

But we need to divide it by the stop loss amount.

So let us see his stop loss.

Burstall is five rupees, so five hundred rupees divided by five is one hundred.

So the maximum quantity he can buy is hundred quantity.

OK, even if he loses that trade he will lose only five hundred rupees.

Whatever it is this capital, it will still be there.

Correct.

Or if you see the stop losses.

Ten rupees.

So five hundred rupees divide by ten points dangerous fifty.

So the maximum quantity he can take is 50 quantity.

He can also consider for 50 rupees instead of five hundred rupees if he feels worried about the broker

charges or the other tax charges which he might incur after the trade so that even that is covered.

Now let's say misdirects do not want to trade with stocks.

He wants to trade with futures and options.

For example, bank future.

OK, in this current market situation, one lot of nifty bank future is twenty five quantity.

When you're trading with nifty bank, we need to do at least eighty two hundred points of buffer.

Correct, because the volatility is high when you're trading in bank.

Nifty right.

Minimum eighty two hundred points of stop loss he needs to keep.

So if we consider eighty points that is a stop loss in to twenty five.

That is the minimum lot.

So it will come up to two thousand rupees but there are twenty trading days in the month so twenty days

in to two thousand rupees is forty thousand rupees traders.

Now tell me a personal salary.

Fifty thousand rupees per month.

We have the capacity to risk 40000 rupees in a month, for sure we cannot, right?

We cannot compromise on our present security of 30000 because what will you do for is rent and food?

He cannot compromise on his future security of ten thousand rupees also because his future has to be

secure.

Now, the only way he can increase is the risk appetite is by increasing his salary.

So if Mr. XLE department is eighty thousand instead of fifty thousand, in which thirty thousand goes

towards his present security and ten thousand rupees goes to his future security, he will have forty

thousand rupees still with them, which he can use to increases risk appetite.

Correct traders.

I believe you will agree with me on this.

So first, Mr. X has to focus on increasing his present salary so that he can increase this capacity

without affecting his present and future security traders.

I'm able to focus on my trade without getting emotional only because I know my loss will never be more

than my pocket size.

After following this, I have never felt emotionally tensed or weak because I know the worst outcome.

If the market goes against me right, I can confidently tell you 50 percent of the battle is already

won by controlling our emotion.

At least 50 percent is our strategy and our experience in the stock market.

Can a person take a risk of thousand rupees and make a profit of 15 20 thousand rupees?

Is it possible for him to do all the time?

Absolutely they cannot.

The risk has to be at least seven thousand to eight thousand rupees so that they can earn fifteen thousand.

I'm speaking about intraday.

In intraday, you can expect one to one or one is to one point five.

And most of the time you can expect at maximum one is to risk to reward.

But if will be more greedy for sure, the market will hit a stop loss and we will lose the trade.

OK, traders, it's very important that everybody takes care of the prison security and the future security

before they start investing in training.

Once you take care of these two things, only then we need to invest in the stock market.

OK, there's a very important concept.

I suggest to you to watch this video more than three or four times because you need to get more clarity

about this before you start investing in the stock market traders.

That's all for this lecture.

I hope you enjoyed this video.

I'll see you in the next one.