Learn to manage multiple positions

4.3.10 · Stock-Market › How to Trade — Execution & Platforms

YEH matter kyun karta hai?

Jab aap ek position hold karte ho, aapka risk obvious hota hai: stop-loss tak ki distance. Jab aap paanch positions hold karte ho, teen cheezein secretly stack up ho jaati hain:

1. Correlation — agar aap HDFC Bank, ICICI, aur Axis mein long ho, toh yeh basically banks par ek bada bet hai, teen nahi.
2. Total heat — aapke saare open risks ka sum quietly us level se zyada ho sakta hai jo aap kabhi intentionally risk karte.
3. Attention — aap 10 charts ko waise nahi dekh sakte jaise 1 ko dekhte ho; sloppy exits creep in karne lagte hain.

KEY quantities kya hain?

Rules ko first principles se DERIVE kaise karein

1. Heat kyun cap karein — survival constraint derive karo

Maano aapka account $C$ hai aur aap chahte ho ki $k$ simultaneous stop-outs ki buri streak survive karo bina capital ka $f$ fraction se zyada lose kiye. Worst case mein sab correlated positions ek saath stop hit karti hain, toh:

${\text{Loss}}_{\max }=H=\sum R_i\le f\cdot C$

Agar aap har trade mein same $r$ risk karte ho $n$ trades ke saath: $n\cdot r\le f\cdot C\Rightarrow \boxed{n\le \frac{fC}{r}}$

Example: $C=₹1,00,000$, risk per trade $r=1\%C=₹1000$, ek $6\%$ bure din ko tolerate karna ($f=0.06$). $n_{\max }=\frac{0.06\times 100000}{1000}=6\text{ positions.}$

2. Correlation us number ko kyun shrink karta hai — effective heat derive karo

Do positions jinka risk $R$ hai aur correlation $\rho$ hai, unka combined risk $2R$ nahi hota; variance add hota hai:

${\sigma }_{\text{port}}^2=R^2+R^2+2\rho R\cdot R=2R^2(1+\rho )$

${\sigma }_{\text{port}}=R\sqrt{2(1+\rho )}$

• Agar $\rho =0$ (independent): $\sigma =R\sqrt{2}\approx 1.41R$ — $2R$ se kam! Diversification help karta hai.
• Agar $\rho =1$ (identical): $\sigma =R\sqrt{4}=2R$ — full risk, koi benefit nahi.
• Agar $\rho =-1$: $\sigma =0$ — perfectly hedged.

3. "Sleeve" ke hisaab se heat budget

Positions ko buckets mein group karo (sectors/themes). Heat per bucket aur total cap karo: $H_{\text{sector}}\le f_s\cdot C,{\sum }_{\text{sectors}}{H}_{\text{sector}}=H\le f\cdot C$

Worked Examples

Common Mistakes (Steel-manned)

Active Recall

Connections

• Position Sizing — jahan se har trade ka $R_i$ aata hai.
• Stop-Loss Placement — $R_i$ mein distance define karta hai.
• Risk Management & The 1% Rule — $r$ aur $f$ set karta hai.
• Correlation & Diversification — upar ka $\rho$ math.
• Scaling In and Out — heat dynamically free/deploy kaise karein.
• Trading Journal & Review — realized heat vs. plan track karo.
• Portfolio Beta — index ke against total directional exposure.

Concept Map