Two for one money management.

Here is a specific money management method that helps maximise profits and reduce risk.

1. Identify one ‘unit’ of the instrument that you trade. Suppose you trade 400 Nifty, then 1 unit = 400. If you trade 500 shares of ICICI Bank, then 1 unit = 500.
2. Enter all trades with a well defined stop loss.
3. Once you have a profit which is equal to the stop loss, then exit half of your position, which means, exit half unit.
4. Move the stop loss for the remaining half to break-even. This means the stop loss for the remaining half should be your entry price.
5. Now, you have a ‘free’ trade on the remaining half unit. Keep a trailing stop to maximize profit on this half.