Dear Sirs/Madams,

I am a beginner in Futures trading. I traded nifty Dec 2009 series and found that I have booked profit of 21348 and loss of 21809. I found that on 7th Dec I lost 7180.87 and on 15th Dec I lost 8865.62. At the end instead of making profit I have to take loss. Reason is because I do not know how to put Stop Loss. I trade through ICICIDirect.

on 15th Dec I short sold at 5106 and covered at at 5020. loss of 86 Nifty points.

So, I request experienced Nifty traders to explain clearly how to effect a trade with stop loss.

For example I would like to buy nifty at 5200 on Monday and I can take loss of 20 nifty points. Please tell how I should place buy order and stop loss order. How I should use the Square Off to book my profit after achieving my target of 5250.

Thanking you in advance.

Sounds Confusing...should be a profit trade and not a loss.

We want to know how are you till now placing stop loss? Is it random basis?

Or methodological...

Different traders have different style of stop loss. Some use EMA, some use SAR, what is your style...?

Well 20 points(1000 Rs) is too small stop loss....I would say make it 50 points stop loss and trade with mini nifty! (still 1000 Rs)

Some harsh advice from me. From your post I gather that you have not done your homework well on derivatives. Please do not indulge in these until you remedy this situation.

Derivatives are leveraged positions and the potential for a loss are much higher than delivery based positions.

Also, Derivatives are a zero-sum game. To win money, someone else has to loose. The way I look at a derivative contract is that two people are getting into a battle of wits to take each others money. The other party in your contract could be a trained professional. If you are not confident of winning against your adversary, stay away.

Delivery based trades are better for newbies because a win-win is possible. If I bought a stock at 80 and sold to you at 120. and the stock further rises to 150. Both win. Even if the stock falls below 120 you only have a notional loss. If you hold for some time, you might still gain.

With Derivatives, you MUST take the profit/loss.

Yes sir, there was a typographical mistake, I had bought it at 5106 and squared off at 5020. It was a loss. I had not put any stop loss.

Please explain me with an example like If I have to trade on Monday like Buy Nifty at 5215 with a stop loss of 5165 and to square off (book Profit) at 5265 what are trading steps involved.

I have in the past carried the open position for the next trading day and booked profit when it opened Gap up. Is this a good strategy? On 30th I bought Nifty at 5185, since it nifty closed at 5167 I carried it to next day and I squared of at 5210. Please advise if this is a good strategy?

Thanking you in advance

If you are going to take small profits,then your losses have to be even smaller.

Otherwise, you won't make any money in the long run.

As suggested by man4urheart, instead of 1 lot Nifty, you can trade with 2 lots of Mini-Nifty. You can book partial profits with 1 lot and keep the second position open with a trailing stop-loss.

Another option would be to trade with just 1 lot of Mini-Nifty and keep wider stop-loss and target.

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I hope you understand that trading in futures can lead to large losses.

A loss of Rs 5000 or Rs 10000, in a single day, is common for those who trade in stock futures.

Trade in derivatives only if you can financial capacity to absorb such big losses.

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Dear Alchemistji and man4urheart,

Thanks for your replies. I am willing to take small risk and would like to trade in Futures but in a small way. However, I would like to minimize my losses by using the Stop loss. I just would like to know how & where to enter the Stop loss value. Today I bought Nifty at 5218.5. Then as I had to go for my official work I covered it at 5229. When I came back I found that nifty had touched 5245.

Please explain to me how to where to put the Stop Loss value.

Thanking you

If you ask me:

You shouldn't be trading Futures at all. As your full time work is interfering.

As well as you are not giving 100% to what you do official work.

You are doomed to make losses in futures.