Here are some simple and popular risk management rules that even expert traders use:

1. Never Put All Your Eggs in One Basket

Do not invest all your money in one stock or trade.
Always diversify your money into different stocks or sectors.

🗂️ Example: If you have ₹1 lakh, you may invest ₹20,000 each in 5 different stocks, instead of putting the whole amount into one.

2.  Use a Stop-Loss

A stop-loss is an automatic order that closes your trade if the price moves too much against you.
This way, you don’t lose more money than you planned.

💡 Example: You buy a stock at ₹100. You put a stop-loss at ₹95. If the price falls to ₹95, your broker sells it automatically, saving you from a bigger loss.

3.  Risk Only a Small Part of Your Money Per Trade

Many traders follow the 1% rule — never risk more than 1% of your total money in one trade.

🏦 Example: If you have ₹50,000 to trade, risk only ₹500 per trade.

4.  Use Position Sizing

Position sizing means deciding how many shares you should buy or sell based on your risk limit1.