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A mechanical way to keep risk equal across different stocks
Published by The Retail Trader · JUL 27, 2026 · Risk Management
Putting the same rupee amount into two stocks is not taking the same risk. One moves three percent a day and the other half a percent — holding the same amount in both is three times the difference in risk.
First decide how many rupees you can lose on one trade. Then set the stop loss distance as a multiple of ATR.
Quantity comes from dividing that rupee risk by the stop distance. That is all — and it works on every instrument.
This method solves several problems at once:
• In a volatile stock the size automatically comes out smaller.
• The maximum loss on each trade stays roughly the same.
• Different segments — equity, F&O, commodity — come into one framework.
• The size decision moves out of emotion and becomes arithmetic.
When the calculation shows a very small quantity, that is the answer — in that instrument the trade is too big for your account. Manually raising that number defeats the whole exercise.
This article is educational only — it is not a buy or sell recommendation, it makes no claim of guaranteed returns, and it is not advice. Rules, rates and mechanics are changed from time to time by the exchanges, SEBI and RBI, so verify every number yourself with your broker or an official source.