RISK MANAGEMENT TRADING STRATERGY ?

 In 2026, professional trading is increasingly defined by capital preservation over profit-chasing. A robust risk management strategy ensures that even a string of losing trades cannot "wipe out" your account

1. The Core "Golden Rules" of Risk Management

For most individual and retail traders, these three benchmarks are considered the industry standard for survival:

• The 1-2% Rule: Never risk more than 1% to 2% of your total trading capital on any single trade. For a ₹1,00,000 account, your maximum loss per trade should be ₹1,000–₹2,000.
• Risk-to-Reward Ratio (RRR): Only enter trades where the potential profit is at least twice the potential loss (a 1:2 ratio). Professional swing traders often wait for 1:3 setups.
• Hard Stop-Losses: Always place a stop-loss order at a technical level before entering the trade to remove emotional hesitation.
• 2. Scientific Position Sizing
  In 2026, successful traders calculate their "quantity" based on their risk, not their gut feeling
• • The Formula:
    Position Size = (Total Capital × Risk %) / (Entry Price - Stop Loss Price)
  • Example: If you have ₹1,00,000, risk 1% (₹1,000), buy a stock at ₹500, and set a stop-loss at ₹480:
    ₹1,000 / ₹20 = 50 shares
  • 3. Advanced Defensive Tactics for 2026
    • Volatility-Adjusted Stops: In high-volatility environments, use the Average True Range (ATR) to set wider stops while reducing your position size to keep the total rupee risk the same.
    • Max Daily Loss Limit: Set a "circuit breaker" for your own account (e.g., 5% total daily loss). If hit, stop trading immediately for the day to prevent "revenge trading".
    • Diversification & Correlation: Avoid having all open trades in the same sector (e.g., only IT stocks). If the sector crashes, your "1% risk" on five different stocks becomes a 5% total account hit.
    • Hedging with Options: Use Protective Puts (buying a put while holding a stock) or Covered Calls to cap potential downside during uncertain news cycles.