Nifty Futures Trade Management.

Gourav asks:
“could u please explain money management to trade 1 mini nifty..like how much money 1 need to have in his/her account to trade 1 lot mini nifty..how much maximum in %wise of the total capital can be given as Stop loss.”

Sensible question. The mini nifty details are:

Lot size of 20.
Current Nifty value: 5000
Mini Nifty contract Value = 20 * 5000 = Rs 1,00,000
Approx margin required = Rs 20,000
Cover for drawdowns = 2 times margin = Rs 40,000
Total capital required = Rs 60,000
Desired annual gains = 60% on capital = Rs 36,000
Annual gain in points = 1800. Per month = 150

Stop Loss
This will depend on your trading style as well as your time frame. If you are a day trader, your setups will be on five minute charts. I assume that the maximum loss on a five minute chart pattern will not be more than 20 or 25 points. This is the maximum, the average should be less. But, there will be a run of losses, which means there can be many consecutive losses. To protect against such runs, the trader must make some rules to avoid trading when conditions / setups are not in favor. For example: stop trading for the month if losses exceed 10% of capital. The exact number is not as important as the discipline.

However, random trading will not give any benefits. Traders should work on disciplined methods.