Risk management is really important in trading?

I Don't want to talk much on the topic before putting a real example of recent action in Nifty price action and traders lost a big part of their capital.

Date- 15 March 2022 (3 days back)


We got a superb Bearish pattern with high volume on the Nifty chart at a strong resistance level.

People shorted with high conviction and a few bought Puts and others shorted Calls.

& Next day what happened?

Date- 16 March 2022


If someone shorted with full of their capital, they are bound to lose most of their capital in one day.

Technical or Fundamental analysis is just a method of analyzing & believe me anything can fail but not you? why? we are not GOD or GODDESSES!

The maximum we can do is keep a hold on Fear and greed while trading with proper logic, the above-given example was very good logic and this can happen multiple times. So, we need to maintain risk with the worst-case possible scenario in every trade to save your system to collapse someday with these kinds of crazy moves which can not be managed.

If someone had shorted here on example with a certain limit of capital, then that person could have survived this and maybe recover his/her loss in the next session of trading.

So, yes risk management is one of the most important things in trading.

__________________

Sahil saini

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