Now further let's discuss , how much quantity should we purchase.

For this we should decide our maximum loss that we are open and ready to take. 

As in the stock market we can only control our losses, that's what we are supposed to do. Then profits are taken care of. ELSE IF WE LEAVE IT TO THE MARKET AND NOT DO OUR JOB OF CONTROLLING LOSSES IT WILL CONTROL OUR LOSSESS AND WIPE OUR ACCOUNT.

Say we are ready to take a loss of Rs. 600/-

As mentioned earlier our risk is Rs. 30/- per share , 

The maximum quantity one can buy would be 

 

STOP LOSS IN AMOUNT / SL in figures per share

 

In this case 600/30 =20 shares is the maximum one can buy.which makes it an investment of 940*20=18800/-

 

Our profits would be in the region of Rs. 1200/-. Double of our risk.

 

Which means in every trade that we take for every Rs. 1/- loss there would be Rs. 2/- profit.

 

Which is called Risk : Reward ratio . 

 

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