How to manage trading risk efficiently

Investment in securities is susceptible to market risks which cannot be predicted. While the risk of loss is inherent in the market, we seek to minimize the risk of loss through a dynamic risk management guidance which is an essential feature of our operations. However Investors have to play a vital role in managing their own risk at their end. The risk to reward ratio has to be considered before initiating a trade. Investors should always know that managing risk is more important than making a profit, and proper risk management is what leads to profitable investing. Don't reach for higher rewards without first evaluating the risks involved.  Before you make any decision, consider these areas of importance and invest wisely:   Always take informed decision: Always take your investment decision based on advice from experts/authorized advisors, never initiate trade based on market rumours/tips. Always make sure you are aware of the stocks you are investing into Avoid Leverage: Always create position based on your capacity, avoid creating higher positions on leverage, this is particularly to make sure that in case of volatility in market, the position can be managed and are not unnecessarily reduced for want of margin Stop Loss: Always put stop loss on your position, this would create discipline in the portfolio and restrict losses in case of high volatility. Also one can use alerts like special monitoring in case of major events (elections, quarterly results, general budget etc.)to proactively manage risks Derivatives Trading: Derivatives  fundamentally is a margin based leveraged trading product. Always check the exposure taken and not only the margin paid, also, keep enough funds idle to cater to MTM requirement which may arise in case of market movement Regulatory Guidelines: Always adhere to the margin/risk guidelines as set by broker/exchanges/regulators from time to time. The regulations set are after considering best interest of the investors Focus on Quality: Always make sure that one trades in quality stocks, avoid investing in trade to trade, Z category or the stocks which are under high surveillance as such stock may lack quality fundamentals and may be under some misgovernance Avoid concentration: Avoid creating huge positions in single stock, try to diversify the portfolio not only in terms of multiple stock, but also in the sector in which the stock belongs Monitoring: Always monitor the investments personally and keep a track of the holdings and the portfolio should be reviewed periodically. Hope the above risk management measures will help in building the desired wealth with proper caution