Are there are any techniques of keeping my trading positions in check?

One of the basic rules of trading is that you must never assume positions that you cannot handle. We mean handle in terms of the possible losses and the size in terms of margins and complexity. Both can be equally dangerous for traders.

Even at the risk of repetition it needs to be reiterated that stop losses are a must for every trade. Not just as an afterthought, but stop losses must be part of your order on the trading screen. Another more sophisticated method is to keep limits on losses on a daily basis. This can vary based on the size of your capital and how much you can afford to take, but it is the discipline that is important. For example, on a trading capital of Rs.5 lakh, you have a 5% limit of losing maximum of Rs.25,000 in a single day. At that point, you must have the discipline to shut down your trading terminal and stop trading for the rest of the day.

Always keep a tab on what you are willing to lose? The third discipline pertains to how much capital you are willing to lose. This is important because every trader starts off with finite capital. It does not matter whether the trader is a small trader, Stanley Druckenmiller or George Soros. Capital is finite, though the quantum may differ. The focus must be on deciding at what point of capital loss you will get back to the drawing board and rethink your strategy.