Glossary of Most Common Terms Used in Trading

Have tried to explain few terms which you often see in trade setups posted on Twitter or Trading Blogs

1. Risk Capital

2. Trading capital

3. Bet size or allocation

4. R

5. Trail and Book

Risk Capital It is the amount you are risking and can potentially lose on a single trade Eg: Bought 100 shares of XYZ at 100 Rs with 1% SL Means Risk capital is 100Rs (1 rs per share * 100 shares) Trading Capital It is the value of your portfolio (Your kitty ) Eg: Trading capital of 50,000 means you have bought 50K to the table Bet size or Allocation If portfolio is 50,000 and allocation is 50%, Allocated 50% of the portfolio means you have bought Rs 25,000 worth of shares NOTE : You have not risked Rs 25,000. This 25,000 is your trading capital Reward 15R gains means you have gained 15 times your risk Eg: If you risk Rs 100 and book your trade at 15R, it means you have booked Rs 1,500 Trail & Book Book means you have sold some or all of your stock. Trail means you are looking to sell some or all of your stock at a specific price point (Can be for protecting losses via SL or booking gains as stock moves up)