17. Putting it together – your trading checklist and risk plan
You now know candles, patterns, trends, levels, volume and indicators. But knowledge is not a system. In this chapter we turn it into a simple, repeatable checklist – and, more importantly, a risk plan.
17.1 The 7-step chart checklist
Before every trade, go through these steps in order. Write the answers down.
1. Big picture. What is the Nifty doing? What is the trend on the weekly chart of this stock?
2. Trend on your trading chart. Higher highs and higher lows? Lower? Sideways? Is price above or below the 50-day average?
3. Key levels. Mark support and resistance zones. Where is the nearest level above and below price?
4. Location. Is price at a level, or in the middle of nowhere? Good trades happen at levels.
5. Trigger. What tells you to act now? A breakout with volume, a retest, a hammer at support, a bullish engulfing?
6. Invalidation (stop-loss). Where exactly is your idea wrong? Below the support zone? Below the pattern low? This must be decided before entry.
7. Reward vs risk. Where is the next resistance (for a buy)? Is the potential reward at least 2 times the risk? If not – skip.
Skipping a trade is a decision too. A professional’s best skill is saying "no" to average setups.
17.2 Position sizing – the part nobody teaches
Most beginners decide how many shares to buy based on how much money they have, or how confident they feel. That is how accounts blow up.
Professionals start from the other end: "How much am I willing to lose on this trade?"
A common rule: risk no more than 1% (at most 2%) of your trading capital on one trade.
Example:
- Capital: ₹1,00,000. Risk per trade 1% = ₹1,000.
- Entry ₹500. Stop-loss ₹485. Risk per share = ₹15.
- Quantity = ₹1,000 ÷ ₹15 = 66 shares.
If the stop-loss is hit, you lose about ₹1,000 – just 1%. You can be wrong 10 times in a row and still have 90% of your capital.
17.3 Why small risk wins: a simulation
Here is the surprising truth. You do not need to win most of your trades. If your winners are bigger than your losers, you can be wrong more than half the time and still make money.
Ramesh runs a shop where 7 out of 10 customers buy something, but he gives such big discounts that he makes only ₹10 per sale and loses ₹50 on every return. Suresh sells to only 4 out of 10 customers, but earns ₹100 per sale and loses just ₹40 on returns.
Who earns more? Suresh – by far. Trading is the same. Win rate alone means nothing. What matters is win rate × size of wins vs size of losses.
17.4 Keep a trading journal
For every trade (even paper trades), write:
- Date, stock, timeframe
- Why you entered (which checklist points)
- Entry, stop-loss, target, quantity
- What happened, and what you learned
After 30 trades, read your journal. You will find your own patterns – the mistakes you repeat and the setups that work for you. This is how real improvement happens.
Yeh chapter is module ka sabse important chapter hai. Charts tell you where. Position sizing decides whether you survive. Paper-trade this checklist for at least a month before using real money. And then start small. Very small.
1% of ₹2,00,000 = ₹2,000 risk. Risk per share = ₹10. ₹2,000 ÷ ₹10 = 200 shares.
Your invalidation point is part of the plan. Decide it before entry, and size the position from it.
Expectancy = 0.4 × 2.5 − 0.6 × 1 = +0.4 per trade. Positive edge, even with a low win rate.
- Use a fixed checklist: big picture, trend, levels, location, trigger, stop-loss, reward-to-risk.
- Decide the stop-loss before entry. Size the position from it.
- Risk about 1% (max 2%) of capital per trade.
- Win rate alone means nothing – the size of wins vs losses matters.
- Keep a journal. Paper-trade first, then start small.
- Congratulations – you have finished Technical Analysis. Next: Market Structure.
- Ek line mein: Kitna kamaoge baad mein socho, kitna gawaoge pehle tay karo – 1% risk ka rule aapko market mein zinda rakhega.