8 posts tagged with "risk management"

"Cut your losses short"

Every trader knows this rule.

But HOW do you cut them short?

Today, I'll show you the three main stop loss strategies and when to use each.

What Is a Stop Loss?​

Definition: A predetermined price level where you exit a losing trade to limit your risk.

Purpose:

• Limit losses
• Preserve capital
• Remove emotion from exits
• Allow for systematic trading

Key principle: Set it before you enter the trade.

Strategy #1: Fixed Stop Loss​

How It Works​

Set a fixed price level below (long) or above (short) your entry.

The stop never moves.

Example:

• Entry: ₹1,000
• Fixed Stop: ₹980
• Risk: ₹20 per share
• Stop stays at ₹980 regardless of price movement

Advantages​

1. Simple:

• Easy to understand
• Easy to execute
• No decisions needed

2. Predictable:

• Know exact risk before entry
• Easy to calculate position size
• Clear risk management

3. Psychological:

• No second-guessing
• No emotional decisions
• Follows the plan

Disadvantages​

1. No Profit Protection:

• Stop doesn't move up with price
• Can give back all profits
• No benefit from favorable moves

2. Whipsaws:

• Price may hit stop then reverse
• Common in volatile markets
• Can be frustrating

3. No Optimization:

• Same stop regardless of conditions
• Doesn't adapt to market
• May be too tight or too wide

When to Use Fixed Stops​

Best for:

• New traders (simple)
• Volatile markets (avoid whipsaws)
• Short-term trades (intraday)
• Testing new strategies

Example Setup:

Entry: ₹2,500
Fixed Stop: ₹2,450 (2% below entry)
Target: ₹2,600 (4% above entry)
R:R = 1:2

Strategy #2: Trailing Stop Loss​

How It Works​

Stop moves in your favor as price moves favorably.

Stop never moves against you.

Example:

• Entry: ₹1,000
• Initial Stop: ₹980
• Price moves to ₹1,020
• Stop moves to ₹1,000 (breakeven)
• Price moves to ₹1,040
• Stop moves to ₹1,020
• Stop trails behind price

Types of Trailing Stops​

1. Percentage Trailing Stop​

Stop trails by fixed percentage.

Example:

• Entry: ₹1,000
• Trail by: 2%
• Price ₹1,020 → Stop ₹1,000
• Price ₹1,040 → Stop ₹1,020
• Price ₹1,060 → Stop ₹1,040

Advantage: Simple to calculate
Disadvantage: May be too tight or too wide

2. Point-Based Trailing Stop​

Stop trails by fixed points.

Example:

• Entry: ₹1,000
• Trail by: ₹20
• Price ₹1,020 → Stop ₹1,000
• Price ₹1,040 → Stop ₹1,020
• Price ₹1,060 → Stop ₹1,040

Advantage: Consistent risk
Disadvantage: Doesn't adapt to volatility

3. ATR-Based Trailing Stop​

Stop trails by ATR (Average True Range).

Example:

• Entry: ₹1,000
• ATR: ₹15
• Trail by: 1.5 × ATR = ₹22.50
• Price ₹1,022.50 → Stop ₹1,000
• Price ₹1,045 → Stop ₹1,022.50

Advantage: Adapts to volatility
Disadvantage: More complex

Advantages of Trailing Stops​

1. Profit Protection:

• Locks in profits as price moves favorably
• Reduces give-back of gains
• Maximizes winning trades

2. Trend Following:

• Stays with the trend
• Exits when trend changes
• Captures big moves

3. Emotional Relief:

• No need to decide when to exit
• Automatic profit protection
• Reduces stress

Disadvantages of Trailing Stops​

1. Premature Exits:

• May exit during normal pullbacks
• Can miss continuation moves
• May trail too closely

2. Complexity:

• More complex than fixed stops
• Requires monitoring
• Can be confusing

3. Whipsaws:

• Still subject to whipsaws
• May exit and re-enter frequently
• Can increase trading costs

When to Use Trailing Stops​

Best for:

• Trend-following strategies
• Swing trading
• Experienced traders
• Trending markets

Example Setup:

Entry: ₹2,500
Initial Stop: ₹2,450
Trail by: ₹30
Target: Let trailing stop handle exit

Strategy #3: Time-Based Stop Loss​

How It Works​

Exit the trade after a predetermined time period.

Regardless of profit or loss.

Example:

• Entry: ₹1,000
• Time Stop: 2 hours
• Exit after 2 hours regardless of price

Types of Time Stops​

1. Fixed Time Stop​

Exit after fixed time period.

Example:

• Intraday trade
• Time stop: 4 hours
• Exit after 4 hours

2. Session-Based Stop​

Exit at end of trading session.

Example:

• Day trade
• Exit at 3:30 PM

3. Event-Based Stop​

Exit before specific events.

Example:

• Exit before earnings announcement
• Exit before Fed meeting
• Exit before expiry

Advantages of Time Stops​

1. Discipline:

• Forces decision-making
• Prevents over-holding
• Reduces analysis paralysis

2. Risk Management:

• Limits time exposure
• Reduces overnight risk
• Prevents forgotten positions

3. Simplicity:

• Easy to understand
• Easy to execute
• No price monitoring needed

Disadvantages of Time Stops​

1. Arbitrary:

• May exit at wrong time
• Doesn't consider market conditions
• May cut winners short

2. Missed Opportunities:

• May exit before move completes
• Doesn't adapt to market
• May miss continuation

3. No Profit Optimization:

• Doesn't maximize gains
• Doesn't protect profits
• May give back gains

When to Use Time Stops​

Best for:

• Intraday trading
• News-based trades
• Event-driven strategies
• Risk management

Example Setup:

Entry: ₹2,500
Stop Loss: ₹2,450 (backup)
Time Stop: 2 hours
Target: Let time stop handle exit

Combining Stop Loss Strategies​

Multi-Layer Approach​

Layer 1: Fixed Stop (Risk Management)

• Set at 2% below entry
• Never moves
• Protects against catastrophic loss

Layer 2: Trailing Stop (Profit Protection)

• Activates after +1R profit
• Trails by ₹30
• Protects profits

Layer 3: Time Stop (Discipline)

• Exits after 4 hours
• Prevents over-holding
• Forces decision

Example:

Entry: ₹2,500
Fixed Stop: ₹2,450 (2% risk)
Trailing Stop: Activates at ₹2,550 (+1R)
Time Stop: 4 hours

Conditional Stops​

Use different stops based on conditions:

Trending Market:

• Use trailing stops
• Let winners run
• Cut losers quickly

Ranging Market:

• Use fixed stops
• Take profits quickly
• Avoid whipsaws

Volatile Market:

• Use wider stops
• Add time stops
• Reduce position size

Real Examples​

Example #1: Fixed Stop Success​

Setup:

• Entry: RELIANCE @ ₹2,500
• Fixed Stop: ₹2,450
• Target: ₹2,600

Result:

• Price hits ₹2,600
• Profit: ₹100 per share
• Fixed stop worked perfectly

Example #2: Trailing Stop Success​

Setup:

• Entry: TCS @ ₹3,000
• Initial Stop: ₹2,940
• Trail by: ₹60

Result:

• Price moves to ₹3,200
• Stop trails to ₹3,140
• Price reverses to ₹3,100
• Exited at ₹3,140, profit ₹140

Example #3: Time Stop Success​

Setup:

• Entry: INFY @ ₹1,500
• Time Stop: 2 hours
• Backup Stop: ₹1,470

Result:

• After 2 hours, price ₹1,480
• Exited at ₹1,480, small loss ₹20

Example #4: Stop Loss Failure​

Setup:

• Entry: HDFC @ ₹1,600
• Fixed Stop: ₹1,568
• Target: ₹1,680

Result:

• Price hits stop at ₹1,568
• Loss: ₹32 per share
• Price then moves to ₹1,700
• Stop was too tight

Common Stop Loss Mistakes​

Mistake #1: No Stop Loss​

Wrong: "I'll hold until it comes back"
Right: Always set a stop before entering

Mistake #2: Moving Stops Against You​

Wrong: "I'll give it more room"
Right: Never move stops against your position

Mistake #3: Too Tight Stops​

Wrong: 0.5% stop in volatile stock
Right: Use appropriate stop distance

Mistake #4: Too Wide Stops​

Wrong: 10% stop for 2% target
Right: Maintain reasonable R:R

Mistake #5: Emotional Stops​

Wrong: Moving stops based on fear
Right: Set stops based on technical levels

Stop Loss Best Practices​

Practice #1: Set Before Entry​

Always set stop before entering trade
Never enter without knowing your exit

Practice #2: Use Technical Levels​

Set stops at:

• Previous swing lows
• Support/resistance levels
• Moving averages
• Not arbitrary percentages

Practice #3: Consider Volatility​

High volatility = Wider stops
Low volatility = Tighter stops
Use ATR to determine appropriate distance

Practice #4: Test Different Approaches​

Try different stop strategies
Track which works best for you
Optimize based on results

Practice #5: Automate When Possible​

Use broker's stop loss orders
Set alerts for stop levels
Remove emotion from execution

The Bottom Line​

Stop losses are essential for survival.

Choose the right strategy:

• Fixed stops: Simple, predictable
• Trailing stops: Profit protection, trend following
• Time stops: Discipline, risk management

Best approach: Combine multiple strategies

Remember: The best stop loss is the one you actually use.

Take Action Now​

Today:

1. Review your current stop loss strategy
2. Identify which type you use
3. Consider if it's optimal

This Week:

1. Test a different stop strategy
2. Track results
3. Compare performance

This Month:

1. Optimize your stop loss approach
2. Implement best practices
3. Measure improvement

👉 Set Up Automated Stop Losses in TradeLyser
👉 Download: Stop Loss Strategy Guide
👉 Next: The Truth About Win Rate vs Profit Factor

What stop loss strategy do you use? What's your biggest challenge? Share below.

Options trading is different.

Your risk isn't just the premium paid.
It's the premium paid × number of lots.
Plus margin requirements.
Plus assignment risk.

Let me show you how to size options positions correctly.

The Options Risk Challenge​

Equity vs Options Risk​

Equity trading:

• Risk: Stop loss distance
• Simple calculation
• Clear limits

Options trading:

• Risk: Premium paid (buying)
• Risk: Unlimited (selling)
• Risk: Assignment (short positions)
• Risk: Time decay
• Risk: Volatility changes

Much more complex.

Common Options Mistakes​

Mistake #1: "I only paid ₹5,000 premium, so I can risk ₹5,000"

Reality: If you buy 10 lots, you risk ₹50,000

Mistake #2: "Selling options is safe, I'll sell many lots"

Reality: One bad move can wipe out months of premiums

Mistake #3: "I'll use all my capital for options"

Reality: Options can go to zero. Equity can't.

Position Sizing for Options Buying​

The Basic Formula​

For buying options:

Position Size = (Account Risk %) ÷ (Premium Risk %)

Where:
Account Risk % = % of account you want to risk
Premium Risk % = % of premium you expect to lose

Example #1: Buying Call Options​

Setup:

• Account: ₹5,00,000
• Risk per trade: 2% = ₹10,000
• NIFTY 24500 CE @ ₹150
• Expected loss if wrong: 100% (premium)
• Lot size: 50

Calculation:

Premium Risk % = 100% (total loss)
Position Size = 2% ÷ 100% = 2% of account
Position Value = ₹5,00,000 × 2% = ₹10,000
Number of lots = ₹10,000 ÷ (₹150 × 50) = 1.33 lots
Round down: 1 lot
Investment: 1 × 50 × ₹150 = ₹7,500
Risk: ₹7,500 (1.5% of account)

Example #2: Buying Put Options​

Setup:

• Account: ₹3,00,000
• Risk per trade: 1.5% = ₹4,500
• RELIANCE 2500 PE @ ₹80
• Expected loss: 100%
• Lot size: 250

Calculation:

Position Size = 1.5% ÷ 100% = 1.5%
Position Value = ₹3,00,000 × 1.5% = ₹4,500
Number of lots = ₹4,500 ÷ (₹80 × 250) = 0.225 lots
Round down: Can't buy fractional lots
Maximum: 0 lots (too expensive)
Alternative: Find cheaper option or increase account

Example #3: Buying Multiple Options​

Setup:

• Account: ₹10,00,000
• Risk per trade: 2% = ₹20,000
• Strategy: Buy 1 call + 1 put (straddle)
• Call: ₹200, Put: ₹180
• Total premium: ₹380 per lot
• Expected loss: 100%

Calculation:

Position Size = 2% ÷ 100% = 2%
Position Value = ₹10,00,000 × 2% = ₹20,000
Number of lots = ₹20,000 ÷ ₹380 = 52.6 lots
Round down: 52 lots
Investment: 52 × ₹380 = ₹19,760
Risk: ₹19,760 (1.98% of account)

Position Sizing for Options Selling​

The Margin Challenge​

Selling options requires margin:

• SPAN margin
• Exposure margin
• Premium received (reduces margin)

Risk: Unlimited (theoretical)

Conservative Approach​

Rule: Risk only 1% of account per trade

Example: Selling Call Options

Setup:

• Account: ₹5,00,000
• Risk per trade: 1% = ₹5,000
• NIFTY 25000 CE @ ₹100
• Margin required: ₹1,20,000 per lot
• Premium received: ₹5,000 per lot

Calculation:

Maximum margin per trade = ₹5,000
Maximum lots = ₹5,000 ÷ ₹1,20,000 = 0.04 lots
Not possible (minimum 1 lot)

Alternative: Use smaller account portion
Use 0.5% risk = ₹2,500
Still not enough margin

Solution: Use spreads to reduce margin

Using Spreads to Reduce Risk​

Bull Put Spread Example:

Setup:

• Sell NIFTY 24000 PE @ ₹200
• Buy NIFTY 23900 PE @ ₹150
• Net premium: ₹50
• Margin: ₹25,000 per lot
• Max loss: ₹4,500 per lot

Calculation:

Account: ₹5,00,000
Risk per trade: 1% = ₹5,000
Max loss per lot: ₹4,500
Maximum lots: ₹5,000 ÷ ₹4,500 = 1.1 lots
Round down: 1 lot
Investment: ₹25,000 margin
Risk: ₹4,500 (0.9% of account)

Advanced Position Sizing​

Kelly Criterion for Options​

Formula:

Kelly % = (Win Rate × Avg Win - Loss Rate × Avg Loss) ÷ Avg Win

Example:
Win Rate: 60%
Avg Win: ₹3,000
Loss Rate: 40%
Avg Loss: ₹2,000

Kelly = (0.6 × 3000 - 0.4 × 2000) ÷ 3000
     = (1800 - 800) ÷ 3000
     = 0.33 = 33%

Too aggressive for options!

Use Fractional Kelly:

• Quarter Kelly: 8.25%
• Half Kelly: 16.5%
• Recommendation: Quarter Kelly maximum

Volatility-Based Sizing​

High VIX (>20):

• Reduce position size by 50%
• Options more expensive
• Higher risk

Low VIX (<15):

• Normal position size
• Options cheaper
• Lower risk

Example:

Normal position size: 2%
High VIX adjustment: 2% × 0.5 = 1%
Low VIX adjustment: 2% (no change)

Options-Specific Risk Factors​

Factor #1: Time Decay​

Buying options:

• Time works against you
• Position size should account for time decay
• Shorter expiry = smaller position

Selling options:

• Time works for you
• Can use larger positions
• But still limited by margin

Factor #2: Volatility​

High volatility:

• Options expensive
• Higher risk
• Smaller positions

Low volatility:

• Options cheap
• Lower risk
• Larger positions possible

Factor #3: Liquidity​

High liquidity (NIFTY, Bank NIFTY):

• Tight spreads
• Easy to exit
• Normal position sizes

Low liquidity:

• Wide spreads
• Hard to exit
• Smaller positions

Factor #4: Assignment Risk​

Selling options:

• Risk of early assignment
• Need to hold underlying
• Account for assignment cost

Example:

Sell RELIANCE 2500 CE @ ₹50
If assigned: Must buy 250 shares @ ₹2,500
Cost: ₹6,25,000
Account: ₹5,00,000
Problem: Can't afford assignment!

Position Sizing by Strategy​

Strategy #1: Long Calls/Puts​

Risk: Premium paid
Position size: 1-2% of account
Example: ₹5,00,000 account = ₹5,000-₹10,000 per trade

Strategy #2: Covered Calls​

Risk: Underlying stock risk
Position size: Based on stock risk (2% rule)
Example: 100 shares × ₹2,500 = ₹2,50,000 position

Strategy #3: Cash-Secured Puts​

Risk: Stock assignment risk
Position size: Based on assignment cost
Example: ₹2,50,000 cash for ₹2,500 strike put

Strategy #4: Spreads​

Risk: Spread width
Position size: 1-2% of account
Example: ₹5,000 risk for ₹5,00,000 account

Strategy #5: Iron Condors​

Risk: Spread width
Position size: 1% of account
Example: ₹5,000 max loss for ₹5,00,000 account

Real Examples​

Example #1: NIFTY Call Buying​

Setup:

• Account: ₹5,00,000
• NIFTY 24500 CE @ ₹150
• Expiry: 1 week
• Risk: 2% = ₹10,000

Calculation:

Premium per lot: ₹150 × 50 = ₹7,500
Maximum lots: ₹10,000 ÷ ₹7,500 = 1.33
Round down: 1 lot
Investment: ₹7,500
Risk: ₹7,500 (1.5% of account)

Result: Good position size

Example #2: RELIANCE Put Selling​

Setup:

• Account: ₹5,00,000
• RELIANCE 2500 PE @ ₹100
• Margin: ₹1,50,000 per lot
• Risk: 1% = ₹5,000

Calculation:

Margin per lot: ₹1,50,000
Maximum lots: ₹5,000 ÷ ₹1,50,000 = 0.033
Not possible (minimum 1 lot)

Problem: Margin too high for account size
Solution: Use spreads or increase account

Example #3: Bank NIFTY Spread​

Setup:

• Account: ₹5,00,000
• Bull Put Spread
• Max loss: ₹3,000 per lot
• Risk: 1% = ₹5,000

Calculation:

Maximum lots: ₹5,000 ÷ ₹3,000 = 1.67
Round down: 1 lot
Investment: ₹15,000 margin
Risk: ₹3,000 (0.6% of account)

Result: Good position size

Common Mistakes​

Mistake #1: Using All Capital​

Wrong: "I have ₹5L, I'll buy ₹5L worth of options"
Right: Risk only 1-2% per trade

Mistake #2: Ignoring Margin​

Wrong: "I'll sell 10 lots, I only need ₹50K"
Right: Check margin requirements first

Mistake #3: No Stop Loss​

Wrong: "Options can't lose more than premium"
Right: Set stop loss at 50% premium loss

Mistake #4: Over-Leveraging​

Wrong: "I'll buy 20 lots with ₹1L"
Right: Buy 1-2 lots maximum

The Bottom Line​

Options position sizing is more complex than equity.

Key principles:

• Risk only 1-2% per trade
• Account for margin requirements
• Consider assignment risk
• Use spreads to reduce risk
• Never risk more than you can afford to lose

Simple rule: If you're not sure, use smaller position size.

Take Action Now​

Today:

1. Calculate your maximum options position size
2. Write it down where you trade
3. Use it for your next options trade

This Week:

1. Practice position sizing calculations
2. Test with paper trading
3. Refine your approach

This Month:

1. Track options position sizing adherence
2. Analyze: Did you follow rules?
3. Adjust based on results

👉 Use TradeLyser Options Position Calculator
👉 Download: Options Position Sizing Calculator
👉 Next: Risk-Reward Ratios - Why 1:3 Isn't Always Better

How do you size your options positions? What's your biggest challenge? Share below.

One rule. One number. One decision.

2%

That's all you need to know to protect your trading account.

Let me show you why this simple rule is the difference between survival and destruction.

What Is the 2% Rule?​

The 2% Rule: Never risk more than 2% of your account on a single trade.

That's it.

Not 3%. Not 5%. Not 10%.

2%.

The Math​

Account: ₹5,00,000
2% Risk: ₹10,000 per trade
Stop Loss: ₹50 away
Position Size: ₹10,000 ÷ ₹50 = 200 shares

If stopped out: Lose exactly ₹10,000 (2%)
Account remaining: ₹4,90,000 (98%)

Why 2%? Why Not More?​

The Survival Math​

Let's see what happens with different risk levels:

Scenario: 10-Loss Streak (happens to everyone)​

At 2% risk per trade:

• Loss 1: ₹5,00,000 → ₹4,90,000 (-2%)
• Loss 2: ₹4,90,000 → ₹4,80,200 (-2%)
• Loss 3: ₹4,80,200 → ₹4,70,596 (-2%)
• ...
• Loss 10: ₹4,08,000 → ₹3,99,840 (-2%)
• Total loss: 20%
• Account survives

At 5% risk per trade:

• Loss 1: ₹5,00,000 → ₹4,75,000 (-5%)
• Loss 2: ₹4,75,000 → ₹4,51,250 (-5%)
• Loss 3: ₹4,51,250 → ₹4,28,688 (-5%)
• ...
• Loss 10: ₹2,99,000 → ₹2,84,000 (-5%)
• Total loss: 43%
• Account damaged

At 10% risk per trade:

• Loss 1: ₹5,00,000 → ₹4,50,000 (-10%)
• Loss 2: ₹4,50,000 → ₹4,05,000 (-10%)
• Loss 3: ₹4,05,000 → ₹3,64,500 (-10%)
• ...
• Loss 10: ₹1,95,000 → ₹1,75,000 (-10%)
• Total loss: 65%
• Account devastated

The Recovery Math​

How much do you need to recover?

After 20% loss (2% rule):

• Need +25% to recover
• Achievable with good trading

After 43% loss (5% rule):

• Need +75% to recover
• Very difficult

After 65% loss (10% rule):

• Need +186% to recover
• Nearly impossible

The 2% rule keeps you in the game.

Real Examples​

Example 1: Equity Trading​

Setup:

• Account: ₹3,00,000
• Stock: RELIANCE
• Entry: ₹2,500
• Stop: ₹2,450 (₹50 away)

2% Calculation:

• Risk amount: ₹3,00,000 × 2% = ₹6,000
• Position size: ₹6,000 ÷ ₹50 = 120 shares
• Investment: 120 × ₹2,500 = ₹3,00,000
• Risk: 120 × ₹50 = ₹6,000 ✓

If stopped out: Lose ₹6,000 (exactly 2%)

Example 2: Options Trading​

Setup:

• Account: ₹5,00,000
• NIFTY 24500 CE @ ₹150
• Stop: ₹120 (₹30 away)
• Lot size: 50

2% Calculation:

• Risk amount: ₹5,00,000 × 2% = ₹10,000
• Position size: ₹10,000 ÷ (₹30 × 50) = 6.67 lots
• Round down: 6 lots
• Investment: 6 × 50 × ₹150 = ₹45,000
• Risk: 6 × 50 × ₹30 = ₹9,000 ✓

If stopped out: Lose ₹9,000 (1.8% - even safer)

Example 3: Futures Trading​

Setup:

• Account: ₹10,00,000
• NIFTY Futures @ 24,500
• Stop: 24,400 (100 points)
• Lot size: 50

2% Calculation:

• Risk amount: ₹10,00,000 × 2% = ₹20,000
• Position size: ₹20,000 ÷ (100 × 50) = 4 lots
• Investment: 4 × 50 × 24,500 = ₹49,00,000
• Margin required: ~₹2,45,000
• Risk: 4 × 50 × 100 = ₹20,000 ✓

If stopped out: Lose ₹20,000 (exactly 2%)

Common Objections to the 2% Rule​

Objection #1: "2% Is Too Small"​

"I need bigger positions to make money"

Reality check:

• 2% × 20 trades = 40% of account at risk
• If you win 60% of trades, you're profitable
• Compounding works over time

Example:

• Start: ₹5,00,000
• Win 60% of trades (2% each)
• After 100 trades: ₹8,50,000
• 70% growth with 2% risk

Objection #2: "I'm Confident This Will Work"​

"This trade is 100% sure"

Reality:

• No trade is 100% sure
• Even 80% probability trades lose 20% of time
• Confidence ≠ accuracy

Better approach:

• Trade with 2% risk
• If you're right, you make money
• If you're wrong, you survive

Objection #3: "I Need to Make Money Fast"​

"I can't wait for slow growth"

Reality:

• Fast money = Fast losses
• Slow money = Sustainable money
• Surviving > Thriving

Math:

• 2% risk: Survive losing streaks
• 10% risk: Blow up account
• Dead traders make 0%

Objection #4: "My Account Is Too Small"​

"₹50,000 account, 2% = ₹1,000, too small"

Solutions:

1. Build account first (paper trade)
2. Use 2% of larger amount (₹1,00,000 = ₹2,000)
3. Accept smaller positions (better than blowing up)

Remember: Small account + big risk = No account

Advanced: When to Use Less Than 2%​

Use 1% When:​

High volatility markets:

• VIX > 20
• Earnings season
• Major news events

Testing new strategies:

• First 20 trades
• Unfamiliar instruments
• Different timeframes

After losses:

• Recent losing streak
• Emotional state compromised
• Account drawdown > 10%

Use 0.5% When:​

Account < ₹1,00,000:

• Preserve capital
• Learn without risk
• Build confidence

Very volatile instruments:

• Penny stocks
• Cryptocurrency
• High-beta stocks

The 2% Rule in Practice​

Daily Implementation​

Before every trade:

1. Calculate 2% of account
2. Determine stop loss distance
3. Calculate position size
4. Verify: Risk ≤ 2%
5. Enter trade

Example checklist:

Account: ₹5,00,000
2% Risk: ₹10,000
Entry: ₹1,000
Stop: ₹980 (₹20 away)
Position Size: ₹10,000 ÷ ₹20 = 500 shares
Investment: 500 × ₹1,000 = ₹5,00,000
Risk: 500 × ₹20 = ₹10,000 ✓

Weekly Review​

Check:

• Did I follow 2% rule every trade?
• What was my average risk per trade?
• Any trades exceeded 2%?

If yes: Why? How to prevent?

Monthly Analysis​

Track:

• Total risk taken
• Number of 2%+ trades
• Correlation with losses

Goal: 100% adherence to 2% rule

Portfolio Heat: Multiple Positions​

The Problem​

You have 3 open positions:

• Position 1: 2% risk
• Position 2: 2% risk
• Position 3: 2% risk
• Total portfolio heat: 6%

This is acceptable.

The Danger Zone​

You have 5 open positions:

• Each: 2% risk
• Total portfolio heat: 10%

This is dangerous.

Safe Portfolio Heat Levels​

Rule: Keep total portfolio heat below 6-8%

The 2% Rule Calculator​

Formula​

Position Size = (Account Size × 2%) ÷ Stop Loss Distance

Example:
Account: ₹5,00,000
2% Risk: ₹10,000
Stop Distance: ₹50
Position Size: ₹10,000 ÷ ₹50 = 200 shares

TradeLyser Integration​

Auto-calculation:

1. Enter account size
2. Enter entry price
3. Enter stop price
4. TradeLyser calculates position size
5. Shows risk percentage
6. Alerts if > 2%

No math required. No errors possible.

Real Results: Before & After​

Trader A: No Risk Management​

Before 2% rule:

• Risk per trade: 5-10%
• Account: ₹5,00,000
• After 5 losses: ₹2,50,000 (-50%)
• Emotional state: Devastated
• Trading: Stopped

Trader B: With 2% Rule​

After implementing 2% rule:

• Risk per trade: 2%
• Account: ₹5,00,000
• After 5 losses: ₹4,50,000 (-10%)
• Emotional state: Calm
• Trading: Continued

Same strategy. Different risk management. Different outcome.

The Psychology of 2%​

Why It Works​

Small losses:

• Don't hurt emotionally
• Don't affect confidence
• Don't trigger revenge trading
• Allow continued trading

Large losses:

• Devastate emotionally
• Destroy confidence
• Trigger revenge trading
• Stop trading

The Compound Effect​

Month 1: Follow 2% rule
Month 2: Still following (habit formed)
Month 3: Automatic (no thinking required)
Month 6: Different trader (disciplined)
Month 12: Profitable trader (survived to learn)

Common Mistakes​

Mistake #1: "Just This Once"​

"This trade is special, I'll risk 5%"

Problem: Once becomes always

Solution: Never exceed 2%. Ever.

Mistake #2: Moving Stops​

"I'll widen the stop to 3% risk"

Problem: Defeats the purpose

Solution: Set stop first, then calculate position

Mistake #3: Averaging Down​

"I'll add to losing position"

Problem: Increases risk beyond 2%

Solution: One position per trade

Mistake #4: No Stop Loss​

"I'll hold until it comes back"

Problem: Risk becomes unlimited

Solution: Always set stop before entry

The Bottom Line​

The 2% rule isn't about making money.

It's about staying alive.

You can't make money if you're not trading.

You can't trade if you blow up your account.

The 2% rule ensures you survive to trade another day.

Simple. Powerful. Essential.

Take Action Now​

Today:

1. Calculate 2% of your account
2. Write it down where you trade
3. Use it for your next trade

This Week:

1. Follow 2% rule for every trade
2. Track adherence (should be 100%)
3. Notice how losses feel smaller

This Month:

1. Review: Did I follow 2% rule?
2. Calculate: Money saved by small losses
3. Compare: Before vs after emotional state

👉 Use TradeLyser Position Size Calculator
👉 Download: 2% Rule Calculator
👉 Next: Breakout Trading in Indian Markets

Do you follow the 2% rule? What's your biggest risk management challenge? Share below.

The problem with trading rules:

You create them when you're calm.
You break them when you're emotional.

Why?

Because willpower fails under pressure.

The solution:

Don't rely on willpower. Use automation.

The Willpower Myth​

Scenario: Rule Without Automation​

Your rule: "Stop trading after 2 consecutive losses"

What happens:

Loss 1: -₹2,000 ("Bad luck, next one will work")
Loss 2: -₹2,500 ("I should stop... but let me try one more")
Rule broken
Loss 3: -₹5,000 ("Now I'm in trouble")

Why you broke it:

• Emotion overpowered logic
• "Just one more" seemed reasonable
• No physical barrier to prevent it

Scenario: Rule With Automation​

Your rule: "Stop trading after 2 consecutive losses" (automated)

What happens:

Loss 1: -₹2,000 (Alert: "1st loss")
Loss 2: -₹2,500 (Alert: "2nd loss - STOP TRADING")
Attempt Loss 3: BLOCKED "Max losses reached for today"

Why you followed it:

• Software enforced it
• No way to override (designed intentionally)
• Removed human decision

Result: -₹4,500 loss vs -₹12,000+ loss

What Are Automated Rules?​

Automated rules are pre-defined trading guidelines that:

✅ Monitor your trading in real-time
✅ Alert you when approaching limits
✅ Block actions that violate rules
✅ Track adherence automatically
✅ Generate compliance reports

Key difference from manual rules:

Manual: "I should follow this" (relies on discipline)
Automated: "System enforces this" (discipline built-in)

Types of Automated Rules​

Category 1: Risk Management Rules​

Rule: Maximum Risk Per Trade​

Setup:

• Max risk: 2% of account per trade
• Account: ₹5,00,000
• Max risk: ₹10,000

Automation:

IF position size × stop distance > ₹10,000
THEN alert "Exceeds 2% risk limit"
AND block order

Prevents: Oversized positions in emotional states

Rule: Maximum Portfolio Heat​

Setup:

• Max total risk across all open positions: 6%
• Account: ₹5,00,000
• Max heat: ₹30,000

Automation:

Current open positions risk: ₹28,000
New trade risk: ₹10,000
Total would be: ₹38,000 (7.6%)
ACTION: Block new trade
ALERT: "Portfolio heat limit exceeded"

Prevents: Over-exposure across multiple positions

Rule: Daily Loss Limit​

Setup:

• Max daily loss: ₹8,000

Automation:

Current P&L today: -₹7,500
User attempts new trade
ALERT: "Approaching daily loss limit"
If loss reaches -₹8,000:
BLOCK: All new trades for rest of day

Prevents: Revenge trading spirals

Category 2: Frequency Rules​

Rule: Maximum Trades Per Day​

Setup:

• Max trades: 3 per day

Automation:

Trades today: 2
User attempts 3rd trade: ALLOW + Alert "Last trade for today"
User attempts 4th trade: BLOCK "Max 3 trades per day reached"

Prevents: Overtrading and FOMO

Rule: Minimum Time Between Trades​

Setup:

• Wait 30 minutes between trades

Automation:

Last trade exit: 10:15 AM
User attempts trade: 10:30 AM
TIME CHECK: 15 minutes passed
BLOCK: "Wait 15 more minutes (minimum 30 min between trades)"

Prevents: Impulsive rapid-fire trading

Rule: Maximum Trades After Loss​

Setup:

• After a loss, maximum 1 more trade

Automation:

Last trade: Loss
Trades since loss: 0
User attempts trade: ALLOW + Alert "Last trade allowed after loss"
User attempts 2nd trade: BLOCK "Take a break after loss"

Prevents: Revenge trading

Category 3: Strategy Rules​

Rule: Only Trade Planned Setups​

Setup:

• Pre-market: Create watchlist of 5 stocks
• Only these are tradeable today

Automation:

Watchlist: RELIANCE, INFY, HDFC, TCS, ICICI
User attempts: WIPRO
BLOCK: "WIPRO not on today's watchlist"

Prevents: Random FOMO trades

Rule: Required Setup Criteria​

Setup:

• My A+ setup requires 5 conditions

Automation:

Checklist before entry:
☐ Above 50 EMA
☐ Volume > 1.5x avg
☐ Breakout pattern
☐ Market trending up
☐ R:R > 1:2

User attempts entry with 3/5 met:
ALERT: "Only 3 of 5 criteria met. Sure you want to proceed?"
User can override (with note) or cancel

Prevents: Trading B/C setups

Rule: Strategy-Market Match​

Setup:

• Strategy A: Only in trending markets (VIX < 15)
• Strategy B: Only in ranging markets (VIX 15-20)

Automation:

Current VIX: 22
User attempts Strategy A:
ALERT: "VIX too high for Strategy A (breakouts)"
SUGGEST: "Consider Strategy B (mean reversion) or wait"

Prevents: Strategy-condition mismatch

Category 4: Time-Based Rules​

Rule: No Trading in First 15 Minutes​

Setup:

• Wait until 9:30 AM to trade

Automation:

Current time: 9:22 AM
User attempts trade:
BLOCK: "Trading not allowed before 9:30 AM"
COUNTDOWN: "8 minutes remaining"

Prevents: Getting trapped in opening volatility

Rule: Close All by 3:00 PM​

Setup:

• All intraday positions must close by 3 PM

Automation:

Time: 2:55 PM
Open positions: 2
ALERT: "5 minutes to mandatory close time"
SUGGESTION: "Close RELIANCE and INFY now"

Time: 3:00 PM
IF positions still open:
AUTO-CLOSE at market price

Prevents: Holding past optimal time

Rule: No Trading on Specific Days​

Setup:

• No trading on Mondays (historically bad for me)
• No trading on result days

Automation:

Day: Monday
User attempts trade:
BLOCK: "No trading on Mondays per your rules"

Stock: RELIANCE
Result date: Today
BLOCK: "RELIANCE results today - per your rules"

Prevents: Trading in unfavorable conditions

Category 5: Emotional State Rules​

Rule: Pre-Trade Emotional Check​

Setup:

• Must rate emotional state before each trade
• Block if rating < 6 (too emotional)

Automation:

User attempts trade:
PROMPT: "Rate your emotional state (1-10)"
User enters: 4
BLOCK: "Emotional rating too low. Take a break."
LOG: "Blocked trade due to emotional state: 4/10"

Prevents: Trading while tilted

Rule: Break After Loss Streak​

Setup:

• After 2 losses, mandatory 24-hour break

Automation:

Losses today: 2
User attempts new trade:
BLOCK: "2 losses hit. Mandatory break until tomorrow 9:15 AM"
COUNTDOWN: "18 hours remaining"

Prevents: Emotional spiral

Category 6: Position Management Rules​

Rule: Mandatory Stop Loss​

Setup:

• Every trade must have stop loss set within 60 seconds

Automation:

Trade entered: 10:15:00 AM
Time: 10:15:45 AM (45 seconds)
ALERT: "Set stop loss now (15 seconds remaining)"

Time: 10:16:00 AM
IF no stop set:
AUTO-SET stop at -2% from entry
ALERT: "Auto-stop set at [price] (-2%)"

Prevents: Trading without stops

Rule: No Moving Stops Against You​

Setup:

• Can trail stops (in profit direction)
• Cannot widen stops (against you)

Automation:

Original stop: ₹2,450
Current price: ₹2,430 (in loss)
User attempts: Move stop to ₹2,400
BLOCK: "Cannot move stop against your position"
LOG: "Attempted to widen stop - blocked"

Prevents: Hope-based position management

Rule: Partial Profit Taking​

Setup:

• At +1R (first target), must book 50%

Automation:

Entry: ₹2,500
Stop: ₹2,450 (₹50 = 1R)
Target 1: ₹2,550 (+1R reached)
ALERT: "Target 1 reached. Book 50% per your rules"
PROMPT: "Sell 50% now? [Yes/Remind in 5 min]"

If ignored after 5 minutes:
AUTO-SELL 50% at market price

Prevents: Letting full winners turn into losers

How to Set Up Automated Rules in TradeLyser​

Step 1: Identify Your Core Rules​

From your trading journal/experience:

What rules do you break most often?

• After losses?
• When winning?
• When bored?
• When emotional?

Start with 3-5 most important rules.

Step 2: Navigate to Rules Section​

1. TradeLyser → Settings → Trading Rules
2. Click Create New Rule

Step 3: Configure Rule​

Rule Builder Interface:

Rule Name: [Max 3 Trades Per Day]

Rule Type: 
○ Risk Management
○ Frequency Control ← Selected
○ Strategy Requirement
○ Time-Based
○ Emotional Check

Condition:
"Number of trades today" [≥] [3]

Action:
☑ Block new trades
☑ Send alert
☐ Email notification
☐ SMS notification

Alert Message:
"Maximum 3 trades per day reached. No more trading today."

Override:
☐ Allow override with note
☑ No override allowed ← Strict enforcement

Active:
☑ Enabled

Step 4: Test Rule​

Paper trading mode:

1. Enable rule
2. Test with paper trades
3. Verify it works as expected
4. Adjust if needed

Step 5: Activate for Live Trading​

1. Review rule one more time
2. Set Active: Enabled
3. Start date: Tomorrow (or today)
4. Save

Rule is now enforcing!

Example Rules Library​

For Intraday Traders​

1. Max 3 trades per day
2. Stop after 2 losses
3. No trading before 9:30 AM
4. Close all by 3:00 PM
5. Max risk 1.5% per trade
6. Mandatory 30-min break between trades

For Swing Traders​

1. Max 5 open positions
2. Max risk 1% per trade
3. Portfolio heat < 5%
4. Every position must have stop loss
5. Hold positions minimum 2 days (no day-trading)
6. Review all positions before entry

For Options Traders​

1. Max 20% of capital in options
2. No naked selling (must have hedge)
3. Close all options 2 days before expiry
4. Max 3 open option positions
5. Mandatory Greeks check before entry
6. No trading on expiry day (if beginner)

For New Traders​

1. Max 2 trades per day
2. Max ₹5,000 risk per trade
3. Mandatory checklist before every trade
4. Emotional state must be > 6
5. Stop after first loss of day
6. Only trade watchlist stocks
7. No trading first 30 minutes

Real Results: Before & After Automation​

Case Study: Amit - Overtrader​

Before Automation (6 months):

• Trades per day: 8-12
• Win rate: 45%
• Biggest problem: Revenge trading
• Monthly P&L: +₹12K (barely profitable)
• Emotional state: Stressed

Rules Implemented:

1. Max 3 trades per day
2. Stop after 2 losses
3. 30-min break between trades
4. Daily loss limit: ₹6,000

After Automation (6 months):

• Trades per day: 2-3 (67% reduction)
• Win rate: 62% (selective = quality)
• Revenge trading: Impossible (blocked by software)
• Monthly P&L: +₹38K (3x improvement)
• Emotional state: Calm, in control

Amit's words: "The rules saved me from myself. I physically CAN'T revenge trade anymore. Best thing I ever did."

Advanced: Rule Combinations​

Rules can work together:

Combo #1: Streak Protection​

Rule A: After 2 wins, reduce position size 25%
  (Prevents overconfidence)

Rule B: After 2 losses, mandatory break
  (Prevents revenge trading)

Result: Protected from both extremes

Combo #2: Time & Risk​

Rule A: No trading after 2 PM
  (Your stats show you lose afternoon)

Rule B: If already in trade at 2 PM, exit by 2:30 PM
  (Minimize exposure)

Result: Time-based risk management

Combo #3: Ladder Risk Management​

Rule A: Position 1 = 2% risk
Rule B: Position 2 = 1.5% risk
Rule C: Position 3 = 1% risk
Rule D: No position 4 (max 3 positions)

Result: Decreasing size = safer

Common Questions​

Q: Won't rules prevent me from taking good opportunities?

A: They'll prevent you from taking bad "opportunities" that feel good in the moment. Your "good opportunities" should fit your rules.

Q: What if I want to override a rule?

A: Some rules allow override with mandatory note explaining why. Others are strict (no override). You choose when creating rule.

Q: Can I temporarily disable a rule?

A: Yes, but you must:

1. Provide reason (logged)
2. Set re-enable time
3. Confirm you understand risk

Q: What if market conditions change mid-day?

A: Rules can be time-based (e.g., "No Strategy A after 1 PM" is fine). Total disabling of core rules is not recommended.

Q: How many rules should I have?

A: Start with 3-5 core rules. Add more only if needed. Too many rules = complexity = failure to follow.

The Bottom Line​

Trading without automated rules:

• Relies on willpower
• Willpower fails under stress
• Discipline breaks
• Account suffers

Trading with automated rules:

• Relies on systems
• Systems don't fail
• Discipline enforced
• Account protected

You wouldn't drive without brakes.
Don't trade without automated rules.

Take Action Now​

Today:

1. List your 3 most-broken rules
2. Set them up as automated rules in TradeLyser
3. Test in paper trading

This Week:

1. Trade with rules active
2. Journal when rules prevented mistakes
3. Calculate money saved by automation

This Month:

1. Review rule adherence (should be 95%+)
2. Add 2-3 more rules based on data
3. Compare results: before vs after automation

👉 Set Up Automated Rules in TradeLyser
👉 Download: Rule Templates Library
👉 Next: How to Import 5 Years of Historical Trades

What trading rule do you break most often? Share below.

"The stock market is designed to transfer money from the Active to the Patient." — Warren Buffett

Most traders lose money because they trade too much.

Not because they don't know enough. Not because they lack strategy.

Because they can't sit still.

Today, you'll learn the hardest skill in trading: Doing nothing.

The Problem with Always Being "In the Game"​

The Activity Bias​

Humans are wired for action:

• Sitting idle feels unproductive
• Taking action feels like progress
• Doing something feels better than doing nothing

But in trading:

• Activity ≠ Profit
• More trades ≠ More money
• Doing nothing can be the most profitable action

The Opportunity Cost Illusion​

Fear: "If I'm not trading, I'm missing opportunities"

Reality: If you're trading bad setups, you're losing money

Math:

Scenario A: Trade 30 times (including bad setups)

• 15 wins × ₹3,000 = ₹45,000
• 15 losses × ₹2,500 = -₹37,500
• Net: +₹7,500

Scenario B: Trade 12 times (only best setups)

• 8 wins × ₹4,000 = ₹32,000
• 4 losses × ₹2,000 = -₹8,000
• Net: +₹24,000

Fewer trades, better quality, higher profits.

When You Should NOT Trade​

1. When Your Setup Isn't There​

Rule: Only trade YOUR setups

Not trading when:

• 80% of criteria met (close but not exact)
• "Looks similar" to your setup
• "Might work" trades
• Following someone else's call

Example:

Your setup: Breakout + Volume + Trend alignment

Today's opportunity:

• Breakout ✓
• Volume ✗ (below average)
• Trend ✗ (sideways)

Action: DON'T TRADE

Why: This isn't your edge. Your edge requires all three.

2. After Reaching Daily Limits​

Profit limit reached:

• Target: +2% for the day
• Achieved: +2.1%
• Stop trading

Why:

• Preserve gains
• Avoid giving it back
• Prevent overconfidence

Loss limit reached:

• Stop: -1.5% for the day
• Hit: -1.6%
• Stop trading

Why:

• Prevent revenge trading
• Protect capital
• Reset emotionally

3. When Emotionally Compromised​

Don't trade when:

• Angry (at market, yourself, life)
• Anxious (worried, fearful)
• Overexcited (overconfident)
• Tired (mentally exhausted)
• Distracted (personal issues)

Emotional Rating Check:

Rate yourself 1-10:

• 1-4: High emotion (negative)
• 5-7: Calm, neutral
• 8-10: High emotion (positive)

Trade only: 5-7 range

Why: Extreme emotions = poor decisions

4. During High-Impact News​

Don't trade during:

• RBI policy announcements
• Budget day
• Major economic data (GDP, inflation)
• Global events (Fed decisions, geopolitical)
• Result days (if holding that stock)

Why:

• Volatility spikes
• Gaps are common
• Stop losses don't work
• Randomness increases

Exception: If you have a tested news-trading strategy.

5. When Market Conditions Don't Match Your Strategy​

Your strategy: Trend-following breakouts

Market condition: Range-bound, choppy

Action: DON'T TRADE (or use different strategy)

Example:

Match strategy to conditions or stay out.

6. On Expiry Days (If You're Not Experienced)​

Weekly options expiry (Thursday):

• Extreme volatility
• Theta decay accelerates
• Pin risk (options)
• Manipulation possible

If you're new/intermediate: Avoid or reduce size significantly

If you're expert with expiry strategy: Trade with defined risk

7. When You Haven't Prepared​

No preparation = No trading

If you didn't:

• Create trading plan
• Review watchlist
• Analyze key levels
• Check market context
• Set risk limits

Then: Don't trade today

Why: Unprepared trading is gambling

8. During Lunch Break (11:30 AM - 1:00 PM)​

Why avoid:

• Lower liquidity
• Wider spreads
• Choppy price action
• Traps and false moves common

Better: Use this time for:

• Review morning trades
• Plan afternoon session
• Take actual lunch break
• Mental reset

Exception: If you specifically trade lunchtime setups (rare)

9. After Big Wins​

Just made ₹25,000?

Temptation: "I'm hot! Let me trade more!"

Reality: Overconfidence = biggest losses

Action:

• Stop for the day
• Celebrate
• Review what went right
• Resume tomorrow

Why: Protect your gains from yourself

10. When Sick or Physically Unwell​

Physical state affects mental state:

• Headache → poor focus
• Fever → clouded judgment
• Sleep deprived → impulsive decisions
• Hungover → terrible choices

Rule: If you're not 100% physically, don't trade.

Your capital will wait. Opportunities will come again.

11. When You're On Tilt​

Tilt = Emotional meltdown

Signs:

• Revenge trading urges
• "Must win it back" thinking
• Breaking all rules
• Rapid-fire trades
• Increased position sizes

Action: STOP IMMEDIATELY

• Close platform
• Leave desk
• Don't return today
• Maybe not tomorrow either

12. When Your System Says No​

If you have automated rules:

• TradeLyser says: "Max trades reached"
• Broker says: "Position limit hit"
• Your checklist says: "Criteria not met"

Listen to the system. Don't override.

The system exists for when emotions want to break rules.

The Power of Selective Trading​

Case Study: Rajesh - From Overtrader to Selective Trader​

Before (6 months):

• Trades: 487
• Win rate: 48%
• P&L: -₹34,000
• Stress level: Extreme
• Hours spent: 6-8/day

Analysis revealed:

• Only 23% of trades were his A+ setup
• 77% were FOMO/boredom/forcing trades
• A+ setup win rate: 66%
• Other trades win rate: 41%

Change: "I only trade my A+ breakout setup. Everything else, I watch."

After (6 months):

• Trades: 94 (81% reduction!)
• Win rate: 64%
• P&L: +₹87,000
• Stress level: Low
• Hours spent: 2-3/day

Rajesh's words: "I thought less trading meant less profit. It's the opposite. My best trades came when I waited patiently for MY setup."

How to Master Doing Nothing​

Strategy #1: Define Your Setup Precisely​

If you can't describe it in 30 seconds, it's too vague.

Vague: "I trade reversals"

Precise: "I trade when price pulls back to 20 EMA in an uptrend, creates a bullish engulfing candle with volume >1.5x average, and RSI is between 40-60."

Benefit: Clear criteria = easy to identify when NOT there

Strategy #2: Create a "NOT to Trade" List​

My "Do NOT Trade" List:

• Before 9:30 AM
• After 3:00 PM
• Monday (choppy historically)
• Result days
• When VIX > 20
• After 2 consecutive losses
• When emotional rating < 6
• Lunch hours (11:30-1:00 PM)
• Setups outside my A+ criteria
• When I haven't planned

Post it where you trade. Check before every trade.

Strategy #3: Track "Avoided Trades"​

Journal format:

Date: Oct 13, 2025
Time: 10:45 AM

Tempted to trade: RELIANCE breakout
Why I wanted it: Moving fast, FOMO
Why I didn't: Volume was low, not my setup
Outcome: Reversed, would have lost ₹3,500
Lesson: Following rules saved ₹3,500

After 10 avoided trades, you'll see:

• 70% of them were right to avoid
• You "made money" by NOT losing it

This reinforces patience.

Strategy #4: The 5-Minute Wait Rule​

When tempted to trade:

1. Pause: Don't click buy yet
2. Wait: 5 minutes
3. Check: Does it meet ALL criteria?
4. Breathe: 3 deep breaths
5. Decide: Still valid after 5 min?

What happens:

• 60% of FOMO urges pass
• Quality of trades improves dramatically

Strategy #5: Celebrate Non-Trading Days​

Mindset shift:

Old: "I didn't trade today, I wasted the day"

New: "No A+ setups appeared. I protected my capital. Successful day."

Track:

• Days traded: X
• Days watched (no setup): Y
• Win rate on trading days: Z%

If Z% is high: Your patience is working

Strategy #6: Have Other Activities​

During market hours when not trading:

• Read books (trading education)
• Review past trades
• Work on strategy refinement
• Exercise
• Build watchlists
• Study charts
• Anything except "force a trade"

Boredom is NOT a trading setup.

Strategy #7: Set Maximum Trades Per Day​

Force selectivity:

Rule: Maximum 3 trades per day

Effect:

• You become selective (can't waste opportunities)
• Quality over quantity
• Each trade matters

TradeLyser: Set automated alert at trade #3

The Waiting Game: Real Examples​

Example 1: The Patient Swing Trader​

Strategy: Weekly breakouts on daily charts

Week 1: No setups → Watched only
Week 2: No setups → Watched only
Week 3: 1 setup → Entered → Won ₹12,000
Week 4: No setups → Watched only

Result: 1 trade in 4 weeks, highly profitable

Lesson: Quality >> Frequency

Example 2: The Selective Intraday Trader​

Strategy: First hour breakouts only

Typical day:

• 9:30-10:30 AM: Active (if setup appears)
• 10:30 AM-3:30 PM: Watching, not trading
• Most days: 0-1 trades
• Some days: 0 trades

Result: High win rate, low stress, profitable

Lesson: Trading IS watching. Watching is trading.

The Psychology of Inaction​

Why Doing Nothing Is Hard​

1. Action Bias

• Humans prefer doing something over nothing
• Even if "something" is harmful

2. FOMO

• Fear of missing opportunities
• Everyone else seems to be trading

3. Boredom

• Markets are exciting
• Watching without trading feels boring

4. Validation

• Trading makes you feel like a trader
• Not trading makes you feel unproductive

5. Social Pressure

• Trading groups: "I made 10 trades today!"
• You: "I made 0 trades today"
• Feels like falling behind

Reframing Inaction​

Old mindset: "I'm doing nothing"

New mindset: "I'm protecting capital while waiting for MY opportunity"

Old: "I missed that move"

New: "That wasn't my setup. My setup will come."

Old: "Everyone's trading except me"

New: "Everyone's losing except me"

The Bottom Line​

The best traders spend MORE time watching than trading.

Paul Tudor Jones: Watches for weeks, trades for days

Jesse Livermore: "Money is made by sitting, not trading"

Ed Seykota: "The elements of good trading are: (1) cutting losses, (2) cutting losses, and (3) cutting losses. If you can follow these three rules, you may have a chance."

Notice what's NOT on the list? "Trade frequently."

Key insights:

1. More trades ≠ More profit
2. Selectivity = Edge
3. Patience = Profitability
4. Doing nothing IS doing something

Your job isn't to trade every day.

Your job is to trade WELL when the opportunity matches your edge.

Take Action Now​

Today:

1. Write your "Do NOT Trade" list
2. Post it where you trade
3. Commit to honoring it

This Week:

1. Track how many trades you avoided (and why)
2. Review outcomes of avoided trades
3. Calculate "money saved" by not trading

This Month:

1. Reduce trade frequency by 30%
2. Increase selectivity (only A+ setups)
3. Compare: Win rate before vs after

👉 Track Avoided Trades in TradeLyser
👉 Download: "Do NOT Trade" Checklist
👉 Next: 5 Cognitive Biases Destroying Your Performance

What's your biggest challenge with "doing nothing"? Share below.

Pop quiz: What's the most important factor in long-term trading success?

• Strategy? ❌
• Win rate? ❌
• Risk:reward? ❌

Answer: Position sizing.

You can have the best strategy in the world, but if you size positions incorrectly, you'll blow up your account.

Let me show you why—and exactly how to size positions like a professional.

The Brutal Math of Trading​

Consider two traders with identical strategies:

Trader A: Poor Position Sizing​

• Win Rate: 60%
• Avg Win: ₹5,000
• Avg Loss: ₹5,000
• But: Risks 20% per trade

Trader B: Smart Position Sizing​

• Win Rate: 60%
• Avg Win: ₹5,000
• Avg Loss: ₹5,000
• Risks 2% per trade

Who survives?

After hitting 3 losses in a row (which happens to all traders):

Trader A:

• Loss 1: -20% (₹1,00,000 → ₹80,000)
• Loss 2: -20% (₹80,000 → ₹64,000)
• Loss 3: -20% (₹64,000 → ₹51,200)
• Total: -48.8%
• Needs +95% to recover

Trader B:

• Loss 1: -2% (₹1,00,000 → ₹98,000)
• Loss 2: -2% (₹98,000 → ₹96,040)
• Loss 3: -2% (₹96,040 → ₹94,119)
• Total: -5.9%
• Needs +6.3% to recover

See the difference? Same strategy. Massively different outcomes.

What Is Position Sizing?​

Position sizing answers one question:

"How much should I risk on this trade?"

Not: "How many shares should I buy?"
Not: "How much can I afford?"
But: "How much am I willing to lose if I'm wrong?"

The Fixed Percentage Method​

Rule: Risk a fixed percentage of your capital per trade.

Standard Risk Levels:​

Most pros use 1-2% per trade.

The Formula:​

Position Size = (Account Size × Risk %) / Stop Loss Distance

Example:
Account: ₹5,00,000
Risk: 2% = ₹10,000
Entry: ₹1,000
Stop: ₹980 (20 points away)

Position Size = ₹10,000 / ₹20 = 500 shares

If stopped out: Lose exactly ₹10,000 (2%)

Real Examples​

Example 1: Equity Trade​

Setup:

• Account: ₹3,00,000
• Risk: 1% = ₹3,000
• Stock: RELIANCE
• Entry: ₹2,500
• Stop: ₹2,450 (₹50 away)

Calculation:

Position Size = ₹3,000 / ₹50 = 60 shares

Investment: 60 × ₹2,500 = ₹1,50,000
Risk: 60 × ₹50 = ₹3,000 ✓

Example 2: Options Trade​

Setup:

• Account: ₹5,00,000
• Risk: 2% = ₹10,000
• NIFTY 24500 CE @ ₹150
• Stop: ₹120 (₹30 away)
• Lot size: 50

Calculation:

Position Size = ₹10,000 / (₹30 × 50)
= ₹10,000 / ₹1,500
= 6.67 lots
= 6 lots (round down)

Investment: 6 lots × 50 × ₹150 = ₹45,000
Risk: 6 lots × 50 × ₹30 = ₹9,000 ✓

Example 3: Futures Trade​

Setup:

• Account: ₹10,00,000
• Risk: 1.5% = ₹15,000
• NIFTY Futures @ 24,500
• Stop: 24,400 (100 points)
• Lot size: 50

Calculation:

Position Size = ₹15,000 / (100 × 50)
= ₹15,000 / ₹5,000
= 3 lots

Investment: 3 lots × 50 × 24,500 = ₹36,75,000
(Margin required: ~₹1,80,000)
Risk: 3 lots × 50 × 100 = ₹15,000 ✓

Advanced Position Sizing Strategies​

1. Kelly Criterion​

Mathematical formula to maximize long-term growth:

Kelly % = (Win Rate × Avg Win - (1 - Win Rate) × Avg Loss) / Avg Win

Example:
Win Rate: 60%
Avg Win: ₹5,000
Avg Loss: ₹3,000

Kelly = (0.6 × 5000 - 0.4 × 3000) / 5000
     = (3000 - 1200) / 5000
     = 0.36 = 36%

Problem: 36% is too aggressive for most traders.

Solution: Use Half Kelly or Quarter Kelly

Half Kelly = 18%
Quarter Kelly = 9%

Recommendation: Start with Quarter Kelly, max Half Kelly.

2. Volatility-Adjusted Sizing​

Adjust position size based on market volatility:

Position Size = Base Size × (Normal VIX / Current VIX)

Example:
Normal VIX: 15
Current VIX: 20
Base position: 2%

Adjusted = 2% × (15/20) = 1.5%

Result: Automatically reduce size in high volatility.

3. Confidence-Based Sizing​

Scale position size based on setup quality:

Example:

• A+ setup with all conditions: 2% risk
• A setup with most conditions: 1.5% risk
• Marginal setup: Skip it

4. Pyramid Scaling​

Add to winning positions:

Initial position: 1%
After +50% of target: Add 0.5%
After +75% of target: Add 0.25%

Total risk: 1.75% (but averaged price is better)

Rule: Always trail stops on entire position.

Position Sizing Mistakes to Avoid​

❌ Mistake #1: Fixed Share Quantity​

Wrong: "I always buy 100 shares"

Why wrong: 100 shares of ₹50 stock = ₹5,000
100 shares of ₹2,500 stock = ₹2,50,000

Fix: Calculate position size based on risk.

❌ Mistake #2: Using All Available Capital​

Wrong: "I have ₹1L, so I'll use it all"

Why wrong: One bad trade = 100% loss

Fix: Never use more than 10-20% of capital per trade.

❌ Mistake #3: Ignoring Stop Loss​

Wrong: "I'll buy ₹1L worth and hope"

Why wrong: No defined risk = no position sizing

Fix: Always set stop before calculating position size.

❌ Mistake #4: Revenge Sizing​

Wrong: "I lost ₹10K, so I'll risk ₹20K to win it back"

Why wrong: Doubling risk doubles ruin probability

Fix: Stick to your % rule, especially after losses.

❌ Mistake #5: Over-Leveraging​

Wrong: "I'll use 10x leverage because I'm confident"

Why wrong: Confidence doesn't reduce risk

Fix: Higher leverage = smaller position size.

Portfolio Heat: Managing Multiple Positions​

Portfolio Heat = Total risk across all open positions

Example:​

Trade 1: 2% risk
Trade 2: 2% risk
Trade 3: 1.5% risk

Total Portfolio Heat: 5.5%

Safe Portfolio Heat Levels:​

Rule: Keep portfolio heat below 6-8% maximum.

Position Sizing for Different Account Sizes​

Small Account (₹50,000 - ₹2,00,000)​

Challenges:

• Lot sizes too large
• Limited diversification
• High percentage swings

Strategy:

• Focus on equity (not F&O)
• 2-3% risk per trade
• Maximum 2-3 positions
• Accept concentration risk

Medium Account (₹2,00,000 - ₹10,00,000)​

Advantages:

• Can trade F&O
• Some diversification possible
• More flexibility

Strategy:

• 1.5-2% risk per trade
• Maximum 3-4 positions
• Mix of equity and F&O
• Portfolio heat: 6% max

Large Account (₹10,00,000+)​

Advantages:

• Full diversification
• Multiple strategies
• Professional management possible

Strategy:

• 0.5-1% risk per trade
• Multiple positions (5-10)
• Different strategies
• Portfolio heat: 5% max

The Math of Survival​

Question: How many losses in a row can you survive?

At 1% risk per trade:​

1. -1% → 99% remaining
2. -1% → 98.01% remaining
3. -1% → 97.03% remaining ... 10 losses: 90.44% remaining 20 losses: 81.79% remaining

Survivable.

At 10% risk per trade:​

1. -10% → 90% remaining
2. -10% → 81% remaining
3. -10% → 72.9% remaining ... 10 losses: 34.87% remaining 20 losses: 12.16% remaining

Account destroyed.

Lesson: Small position sizes = longevity.

Position Sizing Checklist​

Before every trade:

• What's my account size?
• What % am I risking? (1-2% recommended)
• Where's my stop loss?
• What's the distance to stop (in ₹)?
• What's my position size calculation?
• Does this exceed portfolio heat limits?
• Can I afford to be wrong?
• Have I rounded down (not up)?

If any answer is unclear: Don't take the trade.

TradeLyser Position Size Calculator​

TradeLyser automates position sizing:

Input:

• Account size: ₹5,00,000
• Risk %: 2%
• Entry: 24,500
• Stop: 24,400

Output:

• Risk amount: ₹10,000
• Position size: 3 lots
• Investment: ₹36,75,000
• Margin required: ₹1,80,000
• Portfolio heat: 5.5% (safe)

Plus automatic alerts:

• "Position size exceeds 2% risk"
• "Portfolio heat above 6%"
• "Consider reducing size"

The Bottom Line​

You can be right about direction 70% of the time and still blow up your account with poor position sizing.

You can be right 50% of the time and steadily grow wealth with proper position sizing.

Position sizing is:

• Not sexy
• Not exciting
• Not fun

But it's the difference between:

• Long-term success and early failure
• Sleeping peacefully and staying awake worried
• Surviving and thriving

Master this skill before worrying about indicators, strategies, or setups.

Take Action Now​

Today:

1. Calculate your position size for your next trade (use the formula)
2. Check if you've been oversizing (be honest)
3. Set a maximum risk % rule

This week:

1. Use TradeLyser position calculator for every trade
2. Track your actual risk per trade
3. Ensure portfolio heat stays safe

This month:

1. Review if smaller positions improve sleep
2. Calculate survival probability at different risk levels
3. Adjust based on comfort and results

👉 Use TradeLyser Position Size Calculator
👉 Download: Position Sizing Spreadsheet
👉 Next: Building Your First Strategy Book

What % do you risk per trade? Have you ever blown up an account? Share your experience.

After five years of inconsistent results, mounting losses, and near-burnout, I discovered something that changed everything: Rules aren't restrictions. They're freedom.

Here are the seven rules that transformed my trading from chaotic gambling to systematic profitability.

Rule #1: Never Risk More Than 1% Per Trade​

The Problem I Had:

Early in my career, I'd risk 5-10% on "high conviction" trades. One bad week could wipe out a month of gains.

The Math That Changed Everything:

With 10% risk:

• 5 losing trades = -50% account
• Need +100% to recover

With 1% risk:

• 10 losing trades = -10% account
• Need +11% to recover

Real Impact:

Before: Blown account twice in 2 years
After: Survived 15-trade losing streak with capital intact

How to Implement:

Position Size = (Account Size × Risk %) / Stop Loss Distance

Example:
Account: ₹5,00,000
Risk: 1% = ₹5,000
Stop: 50 points away
Position Size = ₹5,000 / 50 = 100 shares

TradeLyser Feature: Set automated alerts when position size exceeds 1% risk.

Rule #2: No Trading After Two Consecutive Losses​

The Pattern I Discovered:

My journal revealed: After 2 losses, my win rate dropped from 58% to 31%. Why?

• Revenge trading
• Forcing setups
• Abandoning strategy
• Emotional decisions

The Rule:

After 2 losses in a day:

1. Stop trading
2. Close platform
3. Journal both trades
4. Identify what went wrong
5. Return tomorrow (only if ready)

Real Results:

Before this rule (6 months):

• Average day after 2 losses: -₹8,500
• Emotional state: Tilted
• Biggest loss day: -₹32,000

After this rule (6 months):

• Stopped 47 potential "day 3" trades
• Estimated losses avoided: ₹2,18,000
• Mental health: Dramatically better

How to Enforce:

Set a daily loss limit in TradeLyser that automatically alerts you. Better yet, use broker position limits.

Rule #3: Trade Only Your A+ Setups​

The Painful Realization:

I tracked 300 trades and discovered:

• A+ setups (my best pattern): 68% win rate
• A/B setups: 52% win rate
• C setups (boredom trades): 29% win rate

The Rule:

Only trade when:

• My primary pattern appears
• Market context is favorable
• Risk:reward is minimum 1:2
• I can articulate the thesis in one sentence

Example:

A+ Setup (I take this): "Bullish flag breakout on NIFTY with rising volume, broader market trending up, clean support nearby."

C Setup (I skip this): "Stock is moving... looks interesting... maybe it'll go up?"

Impact:

Before: 23 trades/month, 48% win rate
After: 12 trades/month, 64% win rate
Result: Same profit with half the stress

Remember: Boredom is not a trading setup.

Rule #4: Set Stops Before Entry (No Exceptions)​

The Expensive Lesson:

My biggest loss ever: ₹67,000 on a single trade.

Why? No predefined stop loss. I kept moving it: "Just 10 points more..."

The Rule:

Before every trade:

1. Determine stop loss (technical level, not arbitrary)
2. Calculate position size based on stop
3. Enter stop order immediately after entry
4. Never, ever move it against you

The Only Exception:

Moving stop loss in your favor (trailing stop) is allowed and encouraged.

Real Example:

Trade: Long RELIANCE @ 2500
Stop: 2470 (previous swing low)
Target: 2600
Risk:Reward: 1:3.3

Even if it feels wrong, even if "it's about to turn," the stop is sacred.

Result:

• Small losses stay small
• No more catastrophic losses
• Sleep peacefully during overnight positions

Rule #5: No Trading in the First 15 Minutes​

What I Learned:

The first 15 minutes after market open (9:15-9:30 AM) are chaos:

• Overnight news gets priced in
• Stop hunts are common
• Spreads are wider
• Emotional trading is highest

My Data:

First 15-min trades:

• Win rate: 39%
• Average loss: 50% larger than usual
• Emotions: High

After 9:30 AM:

• Win rate: 58%
• Better setups
• Clearer price action

The Rule:

9:15-9:30 AM: Watch only

• Check overnight news
• Identify key levels
• Watch for direction
• Let the dust settle

9:30 AM onwards: Trade my setups

Exception: Pre-planned gap strategies (tested and documented).

Rule #6: Close All Positions by 3:00 PM (Intraday)​

Why This Matters:

For intraday traders, the last 30 minutes (3:00-3:30 PM) are dangerous:

• Liquidity thins
• Volatility spikes
• Unpredictable moves
• Can't react properly

My Experience:

Trades held past 3 PM:

• 34% reversed against me
• Wiped out good days
• Added unnecessary stress

The Rule:

By 3:00 PM:

• All intraday positions closed
• Booked profits or losses
• Day is done

For swing trades:

• Separate account/tracking
• Different risk parameters
• Planned overnight holds only

Result: No more "let me just hold 5 more minutes" disasters.

Rule #7: Journal Before Sleeping (Every Trading Day)​

The Most Important Rule:

None of the above rules matter if you don't have a system to:

• Track adherence
• Identify patterns
• Continuously improve

The Evening Ritual:

Every trading day, before sleep:

1. Journal all trades (5 minutes)
2. Grade my discipline (A-F)
3. Note one thing done well
4. Note one thing to improve
5. Prepare for tomorrow

What to Track:

• Did I follow my rules?
• Which rule did I break (if any)?
• Why did I break it?
• What was the emotional state?
• What's tomorrow's focus?

The Compound Effect:

Day 1: Just recording
Week 1: Noticing patterns
Month 1: Behavior changing
Month 3: Rules become automatic
Month 6: Different trader

Make It Easy:

Use TradeLyser's auto-journaling:

• Trades sync automatically
• Rule adherence is tracked
• Patterns are highlighted
• Reviews take 2 minutes

How I Enforce These Rules​

Level 1: Written Document​

• Rules printed and displayed
• Read before every session

Level 2: Checklists​

• Pre-trade checklist
• Post-trade review
• Daily review

Level 3: Automation​

• TradeLyser automated rules
• Broker position limits
• Alert systems

Level 4: Accountability​

• Share with trading buddy
• Weekly review sessions
• Monthly progress reports

My Results: Before and After Rules​

Before Rules (Year 1-2):​

• Trades: 800+
• Win Rate: 46%
• Annual P&L: -₹1.2L, +₹45K
• Emotional state: Roller coaster
• Sleep quality: Poor

After Rules (Year 3):​

• Trades: 320 (fewer, better)
• Win Rate: 61%
• Annual P&L: +₹4.8L
• Emotional state: Stable
• Sleep quality: Excellent

The difference? Not skill. Not capital. Discipline.

Create Your Own Sacred Rules​

These are MY rules based on MY data. Yours might be different.

How to Find Your Rules:

1. Journal 50 trades (minimum)
2. Analyze the data:
   • When do you perform best/worst?
   • What mistakes repeat?
   • What patterns emerge?
3. Create rules to:
   • Capitalize on strengths
   • Protect from weaknesses
4. Test for 30 days
5. Refine and enforce

The Most Common Objections​

"Rules kill creativity!"

No. Rules provide structure so creativity can flourish. Jazz musicians master fundamentals before improvising.

"But what if a great setup appears?"

If it violates your rules, it's not a great setup FOR YOU. Your edge is your strategy + discipline, not random opportunities.

"I can't follow rules consistently."

Then you can't trade consistently. It's that simple. Automate what you can, build habits for the rest.

Implementation Plan​

Week 1: Choose Your Rules​

• Review your trading journal
• Identify your 3-5 most important rules
• Write them down

Week 2: Create Systems​

• Set up TradeLyser automated rules
• Create checklists
• Set broker limits

Week 3: Practice​

• Paper trade with strict adherence
• Test your systems
• Refine processes

Week 4+: Live Trading​

• Trade with real money
• Track adherence
• Adjust as needed

The Hard Truth​

You already know what you should do.

Stop when you're down.
Use stops.
Trade your plan.
Manage risk.

Everyone knows. Few do it.

The difference between knowing and doing is discipline.

And discipline is built through:

• Clear rules
• Tracking adherence
• Automated enforcement
• Consistent review

Your Turn​

What rules do you need?

Look at your last 20 trades. What would have improved them?

Write down 3 rules today. Start with those.

Don't try to be perfect. Try to be better than yesterday.

Take Action Now​

👉 Set Up Automated Rules in TradeLyser
👉 Download: Trading Rules Template
👉 Next: How to Start Your Trading Day Right

What's your #1 trading rule? Share in the comments.

If you've been trading for any length of time, you've probably heard the sobering statistic: 95% of retail traders lose money. Some studies put it even higher. But here's the real question: Why?

And more importantly: How can you ensure you're in the 5% who succeed?

The Brutal Truth About Trading Statistics​

Recent studies from SEBI and NSE data reveal that:

• 89% of individual F&O traders made losses in FY 2021-22
• Average loss per trader was ₹1.25 lakhs
• Only 11% of traders made profits
• The average profit for winners was just ₹51,000

These aren't encouraging numbers. But they tell us something crucial: Trading is hard, but not impossible.

Why Most Traders Fail: The Real Reasons​

1. No Trading Plan = Flying Blind​

Most traders enter the market with hope, not a plan. They:

• Don't know their entry criteria
• Have no defined exit strategy
• Can't articulate their edge
• Trade based on tips and emotions

The Fix: Document your trading strategy before risking a single rupee. Use TradeLyser's Strategy Book to create reproducible, testable trading plans.

2. Poor Risk Management​

Ask a failing trader: "What's your maximum daily loss limit?"

The answer is usually silence.

Successful traders know:

• Their position size formula
• Maximum risk per trade (typically 1-2%)
• Daily loss limits
• Maximum portfolio exposure

The Fix: Set automated rules in TradeLyser that enforce your risk limits. Let software stop you when emotions want to continue.

3. Lack of a Trading Journal​

How can you improve what you don't measure?

95% of traders:

• Don't journal their trades
• Can't identify their patterns
• Repeat the same mistakes
• Have no data to optimize

The 5% who succeed?

• Journal every single trade
• Review their data weekly
• Identify winning and losing patterns
• Continuously optimize

The Fix: Start journaling today. Even a basic log of entry, exit, and reasoning will transform your trading in 30 days.

4. Emotional Trading​

The market doesn't care about:

• Your rent payment
• Your car loan
• Your need to "win back" yesterday's loss

Emotional trading leads to:

• Revenge trading after losses
• FOMO entries at tops
• Holding losers too long
• Cutting winners too early

The Fix: Create pre-trade checklists and post-trade reviews. Use TradeLyser's "Start My Day" routine to prepare mentally before market open.

5. No Edge​

Here's an uncomfortable question: What's your trading edge?

If you can't answer in one sentence, you probably don't have one.

An edge is:

• A statistical advantage over random outcomes
• Reproducible over hundreds of trades
• Backed by data, not hope
• Specific and testable

The Fix: Use TradeLyser's analytics to discover your actual edge. What setups work? What times of day? Which market conditions?

6. Overleveraging​

F&O trading offers incredible leverage:

• 5x on equity options
• 2-3x on index options
• Intraday leverages up to 20x

But leverage is a double-edged sword. One bad trade with high leverage can wipe out months of gains.

The Fix: Use position sizing calculators. Never risk more than 2% of capital on a single trade. Remember: surviving is more important than thriving.

7. No Continuous Learning​

Markets evolve. Strategies that worked in 2020 may not work in 2025.

Failing traders:

• Use the same strategy forever
• Don't adapt to market changes
• Ignore their trading data
• Never invest in education

Winning traders:

• Review and adapt strategies quarterly
• Study their winning and losing patterns
• Learn from each trade
• Invest in education and tools

The Fix: Set aside time every weekend to review your trades, study market behavior, and refine your approach.

The Path to the 5%: Your Action Plan​

Here's your roadmap to join the elite traders:

Month 1: Foundation​

• Week 1: Create a written trading plan
• Week 2: Set up risk management rules
• Week 3: Start journaling every trade
• Week 4: Review and refine

Month 2: Data Collection​

• Week 1-4: Trade your plan religiously
• Journal everything
• Don't deviate
• Collect 40+ trades of data

Month 3: Analysis & Optimization​

• Week 1: Analyze your data
• Week 2: Identify patterns (winners and losers)
• Week 3: Refine your strategy
• Week 4: Document improvements

Month 4+: Continuous Improvement​

• Weekly reviews
• Monthly deep dives
• Quarterly strategy adjustments
• Annual goal setting

The TradeLyser Advantage​

Joining the 5% requires:

1. ✅ Consistent journaling
2. ✅ Rule enforcement
3. ✅ Data-driven decisions
4. ✅ Continuous learning

TradeLyser provides:

• Automated journaling via broker sync
• Rule tracking with automated alerts
• AI-powered analytics via Elysia
• Strategy comparison tools
• Performance tracking across all metrics

Real Example: From Failing to Consistent​

Trader A's Journey:

Before TradeLyser (2024):

• Trading randomly
• No journal
• Monthly: -₹25,000 avg

After TradeLyser (3 months):

• Discovered he was profitable in morning sessions only
• Lost money consistently after 1 PM
• Strategy: Trade only 9:30 AM - 12:30 PM
• New monthly avg: +₹18,000

The difference? Data revealed his edge. Discipline enforced it.

Your First Steps Today​

Don't wait. Start now:

1. Create a TradeLyser account (free trial available)
2. Import your last 50 trades
3. Spend 30 minutes analyzing your data
4. Identify ONE pattern (good or bad)
5. Create ONE rule to capitalize on it

The Bottom Line​

The difference between the 95% who fail and the 5% who succeed isn't talent. It's not luck. It's not capital.

It's process.

The successful traders:

• Have a plan
• Manage risk
• Journal trades
• Learn continuously
• Execute with discipline

These aren't innate skills. They're habits. And habits can be built.

The question isn't whether you can join the 5%.

The question is: Will you?

Take Action Now​

Ready to start your journey to the 5%?

👉 Start Your Free Trial
👉 Read: The Power of Trading Journals
👉 Download: Trading Plan Template

What's holding you back from consistent profitability? Share in the comments below.