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Stock Market Beginner’s Weekly Educational Guide 4 Day-3 : Understanding Volume in Trading by CapitalKeeper

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Stock Market Beginner’s Weekly Educational Guide 4 Day-3 : Understanding Volume in Trading by CapitalKeeper

By CapitalKeeper | Beginner’s Guide | Indian Sock Market | Market Moves That Matter I 1st July 2025


Week 4 – Day 3: Risk-Reward Ratio & Trade Journaling – The Secret to Consistent Profits


🎯 Objective:

Help new and aspiring traders build long-term profitability through proper risk-reward management and consistent trade journaling.


What is Risk-Reward Ratio (RRR)?

The Risk-Reward Ratio compares your potential loss on a trade to the potential gain.

Formula:
Risk-Reward Ratio = Potential Loss / Potential Gain

Example:

🎯 Golden Rule: Never risk more than you can gain. Stick to minimum 1:2 or 1:3 RRR for consistency.


🛠️ How to Use RRR in Daily Trading:

StepWhat to Do
1. Define EntryUse breakout or pattern confirmation
2. Set Stop LossBased on chart (support/resistance/ATR)
3. Set Realistic TargetsBased on technical levels, Fibonacci, or RRR
4. Place Trades Only IfRRR is 1:2 or better

📌 Note: Avoid overtrading even in high conviction setups if RRR is below 1:1.


📓 Trade Journaling: Your Path to Improvement

A trade journal is your personal trading logbook. It helps track:


📘 What to Record in Your Trade Journal:

FieldSample Entry
Stock NameITC
Entry Price₹440
Stop Loss₹425
Target Price₹475
Actual Exit₹468
RRR Achieved1:2.3
Reason for TradeBullish breakout from flag + RSI confirmation
Mistakes/LearningsExited early due to news panic

🧠 Use Excel, Notion, Google Sheets, or apps like TraderSync or Edgewonk.


🚀 Benefits of Risk Management & Journaling:

Risk-Reward DisciplineJournaling Habit
Consistent capital growthReflective improvement
Limits emotional tradingBuilds accountability
Helps scale trades smartlyIdentifies winning strategies

🔎 Common Mistakes to Avoid:


Quick Recap:

TipWhy It Matters
Always check RRR before entryPrevents unnecessary risk
Use fixed SL + flexible targetGives trades room to breathe
Log every trade in journalSharpens decision-making over time
Analyze journal weeklySpot winning setups and avoid past errors

📍 Conclusion:
If you can master the discipline of managing risk and learning from your own trades, your path to profitable trading becomes much clearer.

✨ Every great trader tracks two numbers:
Risk-Reward and
Trading Mistakes

Start yours today on CapitalKeeper.in 📊

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