If you are good at risk management in share market then you are considered to be rich and good trader. Trader who know the benefits of trading, who is able to read charts, fetch good profit and most importantly able to understand the risk management. But what is exactly risk management in share market.

Risk Management for Traders in Stock Market
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Risk management is the process of understanding and calculating the risk that one wants to undertake while trading in NSE share market and developing the plans to manage it. It usually involves utilizing variety of share trading techniques and financial analysis.

Risk management for Traders in Market

Risk Tolerance:

A Trader should know his overall risk tolerance before he start trading in NSE. Before one trade in stock the trader should determine how much he is willing to lose if the trade goes in other way. Trader should also fix daily loss while doing Intraday trading in Share Market. Either the trader can fix a loss limit per trade or loss limit per trade.


Traders should first check the stock; if it’s sufficiently liquid then one should ask them about trading in high volume stocks. One should buy and sell quickly at any time. Nifty 50 stocks are most high volume stock.

Plan your entry and stop Loss:

A stock trader should predetermine buying or shorting price and put the stop loss order till the sell order get executed.

Profit Target:

Before placing the trade, Trader should determine the profit target which they want to make any buy or sell order is placed.  Once the position is taken trader should square off position at different profit levels.

Booking Profits:

You can book your profit when the trade reaches your pre-decided target. Don’t be greedy if the market moves as u want. So it is good to book profit either partial or full.

Limit your risk:

Always keep 2.5% risk for day trading and 12% for long term trading. If the loss goes below the above level then trader need to square off. One should keep aside the emotions and just exit from the trade.

By Nifty Target

Also View: Nifty Trading Academy


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