Level 4: Professional Mastery
1. The Mathematics of Capital Drawdown
Losses in trading are non-linear. The deeper you drop into drawdown, the harder it becomes to recover your starting capital:
| Account Drawdown Loss | Gain Required Just to Breakeven |
|---|---|
| -10% Loss | +11.1% Gain |
| -25% Loss | +33.3% Gain |
| -50% Loss | +100.0% Gain (Doubling your remaining money!) |
| -75% Loss | +300.0% Gain (Virtually impossible for retail traders) |
2. The Institutional 1% Capital Risk Rule
Never risk more than 1% of your total liquid trading capital on any single trade. If your account size is ₹2,00,000, your maximum monetary loss per trade is strictly capped at ₹2,000.
3. The Exact Mathematical Position Sizing Formula
Quantity (Lots) = (Total Capital × Risk % per Trade) ÷ (Entry Price − Stop Loss Price)
By fixing your risk before placing your order, market fluctuations will never cause emotional distress or catastrophic account blowouts.
5,000 Free Coins