Module 9: Risk management and trading psychology

Most trading accounts are not lost to bad analysis but to bad risk control: one position too large, one stop moved, one loss chased. This module is about surviving long enough for any edge to matter.

01What risk actually is

Risk is how much you can lose and how likely it is. Measuring it before every trade turns it from a feeling into a number.

02Position sizing

Decide the rupees you are willing to lose on a trade, then size the position so that the stop costs exactly that. Size follows the stop, never the other way round.

03Stop losses

A stop marks the point where the trade idea is wrong. Set it before entry, and treat moving it further away as a decision you would not make with a clear head.

04Risk per trade and per day

Many traders cap each trade at a small share of capital and stop for the day after a set loss. Caps are what make a bad day survivable.

05Drawdowns

A drawdown is the fall from an account's peak. Recovering a 50% drawdown needs a 100% gain, which is why limiting drawdowns matters more than chasing returns.

06Diversification and correlation

Holding many positions that move together is not diversification. Spreading risk means holding things that do not all fall at once.

07Common biases

Overconfidence after wins, revenge trading after losses, anchoring to an entry price and fear of missing out. Naming them is the first step to catching them.

08The journal

Writing down every trade, the plan behind it and how you felt turns experience into evidence. Patterns that memory edits out show up in a journal.

09Where this leads

On A1Stock, stops and targets sit on the chart, paper trading lets you practise without risking money, and the journal records every trade with its plan.