@SakatasHomma - your take on how/when to derisk, and/or move the SL to cost, once the move is in our favor?
2 spoon Sugar? Cuppa Noodles or Cuppa T? Dip Tea or Dip the TOE?
"Confidence kabhi nahi ayega… na 52 weeks low pe na 52 weeks high pe… hence, ek systaam rakho. Uske mutabik entry aye to karo, exit aye toh nikal jao…. Confidence kabhi nahi ayega. Aur aana bhi nahin chahiye tbh" ~ Mahatma Gandhi
Great question, and one that every trader should think about deeply, continuously, and at all times.
When and how to derisk should change depending on the market environment.
Bullish Conditions
In a bullish market — for example, when the index is above the 10/21 EMAs and trend momentum is above 50% and rising — we have a bullish bias.
If you have peak low-risk entries, the ideal approach is to ride the trend as far as possible. Only take partial profits or tighten stops when you see stock-specific signs of an impending pullback or consolidation — such as a stop volume signal.
At that point, you can:
Raise stops to just below the swing low on an intraday timeframe (e.g., 25/75 min)
Sell a portion (25%, 33%, or 50%) of the position and trail the rest.
The Current Scenario: Not Bullish (at all)
Right now, we’re not in a bullish environment. The bounce has just started (or has it yet?) and has a higher probability of being a counter-trend bounce rather than a full-fledged upswing to all-time highs.
It could turn into a sustained rally — but at this stage, we can’t be certain (can never be certain tbh).
This means that by entering now, you’re exposing your portfolio to risk but without the usual upside reward potential.
But, to make money you have to make a bet. But Balance…….
We need to strike a delicate balance between:
Not being late (waiting for too much confirmation and getting caught at the top if it’s a counter-trend bounce)
Not going in too early all guns blazing (risking too much capital before the bounce proves itself)
The solution is progressive exposure (Not dipping the Toe)
An example of Progressive Exposure
Let’s keep it simple: For simplicity sake
Maximum positions allowed: 5
Risk per position: 0.5% of portfolio
Total maximum risk if fully allocated: 2.5%
That’s too much to risk at once in this environment.
Instead:
Open a maximum of 2 positions initially.
Derisk those positions first before opening the next set of 2.
Derisking Methods
Method 1 — Raise Stops Quickly
Once you get a positive move, identify a suitable pivot and raise your stop so that your trailing stop-loss (TSL) is above the buy price.
Method 2 — Take Partial Profits Early
If the trade moves in your favor, sell half the position at 2–3R. You can then:
Keep the remaining 50% at the original stop-loss,
Resulting in a net zero-risk trade.
Keep Risk Small When You Can’t Break Even Yet
Sometimes the move isn’t enough to move stops above entry. In that case, if possible still find a valid technical level to reduce your risk compared to the original stop.
Speed Matters
Do this exercise as quickly as possible — sometimes, it’s possible to go from 0% to 100% invested in a single day while keeping risk contained.
Live Example from Today
I’ll now share a real example from my trades today to illustrate how this method works in practice.
Garuda: It was my 1st trade of the day. I had a 2% stop for a 10% size I.e 0.2% of PF under risk. I doubled the size on the Cup and handle breakout but curtailed the SL to -1% for combined size, effectively keeping the risk to PF same with size doubling (higher PF exposure with risk on PF the same). Sold 1/4 of the position at a paltry profit of 3% (derisking and needed cash for other trades). Shifted the rest SL to just below cost. The PF stood derisked in the process (minor profit).
Prostarm: This was second trade prostarm. Has a 2% SL which got clipped and reversed. 0.2% of PF gone with the wind.
Premier Explosives: 3rd trade. This one was intended as an MIS intraday trade. I had a sub 1% SL here and bigger size. I derisked this by peeling i.e selling a larger portion at a less than 2% move and left the rest with initial cost (again deriked). Since it hit UC and looking at the supply-demand/ volume and where the move occurred, I believed this would have more steam & so I decided to carry it. Essentially this is also a derisked trade.
.
I had another failed trade intraday in Technoe and have an MTF position in Smallcap250. I have very little cash right now.
So, with very little % of PF at risk at any point in time, I management to get a large portion of my PF invested.
Not only my toe is dipped, my whole body is.
(background music….. san sana na nana san sanana nan)
Now I know this might be too fast (surely for some). But I wanted to show you how it can be done. Placing GTTs as I speak in new trades.
If Garuda wouldn’t have moved in my favor, or if Prostram or Garuda, one of them were clipped immediately. I wouldn’t have perhaps opened Premexplosive….
So all of these calculations are made a fast pace. None of them are planned way early, but mota mota the system is planned.
At the beginning, untill sometime (after my Toe dipping days were over) doing this used to be very mentally straining and time consuming (given you also do other things like scanning , hunting peak entry points and for me constantly checking the groups for any question and/or shitposting in general elsewhere), but now it isn’t so much.
It’s the system.
Anyways. If you did find this impromptu post helpful.
You have to thank Raunak from HPA, who gave me the idea that I can convert the reply to the initial question (that is the title of this post) in my private group, Homma Private Access into this post.
Link to my website and HPA if you want to check it out: https://www.sakatashomma.com/premium
Untill next time
Sakatas “dip the whole body” Homma.
(san sana na nana san sanana nan)