And today I'm buying VONE 500 shares @ 21.40 Hoping Price
Will reach LKR 27.20 and I'm hard enough to hold VONE until
Price reach LKR 19.20 if this movement is lost.
So my position size is =(VONE Price x Number of shares bought)/PF
= (21.40*500)/150,000 x %
= 7.1 %
My Risk (R) is = Stop Loss/Total Investment
= ((21.40-19.20)*500 )/ 10700 x %
= 10% ( only for this trade)
My Risk in terms of
My portfolio = Loss for this trade / Total PF value
= 1100/150000 x %
Your risk is 0.7% of your total money which seems fare for me , even up to 1% Ok for me ( depends on your willingness to loose).
But if you are taking a risk more than 1% of your PF it is very very BAD!!!!!!!!!!!!!
My profit = (27.20-21.40) x 500 = LKR 2,900/-
Profit in terms of you Risk = 2900/1100 = 2.6364 R
So don't open a trade which is less than 1R means you are
Taking a big risk than your profit (if it goes your way )
This is called you are taking Calculated Risk !!!!!!!
When you take your next Position Now your PF value is 150,000-10700 = LKR 139300 /-
Even in your life you have to take calculated risk. Don't Risk your life blindly. !!!!!!!!!
I mean everything has a risk ,
Investing is Risky but investing blindly is much much... Riskier. Somebody can say Driving is risky, yes it has involved certain risk but driving without touching the steering-wheel is much more riskier.