Your position size is not a decision

Ask most people how they decided to buy 200 shares and you get an answer about the company. They liked the story. They were confident. It felt like a reasonable amount of money.

None of that is position sizing. Here is what position sizing actually is.

Start with what you are willing to lose. Say your capital is ₹5,00,000 and your rule is that no single trade costs you more than 1%. That is ₹5,000. This number is fixed before you look at any chart.

Then decide where you are wrong. Not where you would feel bad — where the reason you bought stops being true. Say you enter at ₹500 and that level is ₹480.

Now the quantity is not yours to choose. You are risking ₹20 a share. ₹5,000 divided by ₹20 is 250 shares. A ₹1,25,000 position.

You did not decide 250. You decided ₹5,000 and ₹480, and 250 came out.

What this changes

Take the same capital, the same 1%, the same entry at ₹500 — but now your stop sits at ₹450, because that is where the real support is.

₹50 a share. ₹5,000 divided by ₹50 is 100 shares. A ₹50,000 position.

Same trader, same money, same rule, same day. One position is two and a half times the other, and the only thing that changed was the stop.

This is the part worth sitting with: a wider stop does not make a trade safer. Both trades lose exactly ₹5,000 if they go wrong. What the wider stop does is make the position smaller. Room to breathe is not free — you pay for it in size.

The trap running the other way

Most losses do not come from bad analysis. They come from doing this in reverse: pick the quantity first, because 200 shares feels right or because ₹1,00,000 is what is spare — then place the stop wherever the chart looks tidy.

Do that and your risk is whatever the chart happens to hand you. Some days ₹4,000. Some days ₹14,000, on the same rule you thought you were following. You never chose it, so you never see it coming.

The order matters more than the arithmetic. Risk first, stop second, quantity last — and the quantity is an output, not an opinion.

Do it on your next trade

Before you buy anything this week, write down three numbers: what you are willing to lose in rupees, where you are wrong, and what those two make the quantity. If the answer is smaller than you wanted to buy, that is the system working, not failing.

Trade Check does this arithmetic for you — and checks it against the rest of your limits before you commit.