Trading and risk

Study it. Test it. Write it down.

Your recovery target does not change the next trade

Did risk increase because the opportunity changed—or because you lost money?

Your research task

1. Define a paper-trading daily and weekly stopping rule before the session. State what happens after a breach; a limit that can be moved after every loss is not an operating rule.
2. Record expected reward, planned risk, execution costs and actual slippage. Calculate expectancy from the observed distribution rather than quoting an accuracy percentage.
3. Score whether the plan was followed separately from whether the trade made money. A rule-breaking winner should not automatically earn a process score of “good.”

What you should produce

Create a pre-session checklist, position-size worksheet, stop-trading rule and post-session review. Record all skipped trades as well as entries.

The trap to avoid: Changing strategy after two losses or doubling quantity because a previous winner made the account feel larger.

Original hypothetical study exercise. Pair it with the chapter sources below; verify current contract rules and product terms separately.

• SEBI investor education ↗