Orders and risk
Position sizing
Position sizing is deciding how much quantity to trade so that a stop-loss hit costs only a fixed, small part of your capital.
Position sizing answers one question: how many shares or lots. The standard method is fixed fractional. Decide the share of capital you are willing to lose on one trade, convert it to rupees, and divide by the stop-loss distance per unit. The answer is your quantity. The stop-loss sets the size, not the other way round.
This makes every failed trade cost roughly the same, whether the stop-loss is wide or narrow. A wide stop-loss means fewer shares; a narrow one allows more. Without it, your results are decided by whichever trade happened to carry the largest quantity, and that is usually the one taken in a confident mood.
In Indian futures and options the lot is the smallest unit, so the sum often says less than one lot. If the risk on one lot is more than your limit, the honest answer is that the trade is too big for the account. Lot sizes are revised from time to time, so check the current NSE circular before calculating.
The common mistake is sizing by margin: trading as many lots as the broker allows. Margin tells you what you can hold, not what you can afford to lose. The other mistake is doubling quantity after a loss to recover quickly. That is how an ordinary losing streak becomes a deep drawdown.
Worked example
Sizing a Reliance trade at 1 per cent risk
Illustrative numbers: your capital is 2,00,000 rupees and you decide to risk 1 per cent per trade, which is 2,000 rupees. You plan to buy Reliance at 1,400 with a stop-loss at 1,386, a risk of 14 rupees per share. 2,000 divided by 14 is 142.8, so you buy 142 shares, and a stop-loss hit costs 142 times 14, which is 1,988 rupees plus costs. With a wider stop-loss at 1,372, the risk is 28 rupees per share and the quantity falls to 71 shares. 71 times 28 is again 1,988 rupees.
In WizeBuySell
WizeBuySell does not size positions for you. Its strategies mark the entry and the stop-loss, which gives you the risk per unit, the input the calculation needs. The indicators do not know your capital. The numbers on Shares Swing Trade labels, such as +100 at entry and -50 at TP1, show how the position is split between exits, not how many shares suit your account.