What are the basic techniques to minimize losses in the stock market?

For most of my investing career, I used a fixed dollar amount for money management when buying stocks. At the beginning, it was $2,000. That bought me 100 shares of a $20 stock. I thought that's the method that everyone used. As I learned about the stock market, I knew that there were better ways to position sizing (money management) but I didn't know what they were.

So people just make a random purchase of 100 shares, 200 shares etc.

We have to follow the below rules in order minimize the loss and have proper risk management.

Percent Risk Position Sizing

The first method, percent risk position sizing, is well known and it's based on risk to determine the position size. For example, if you are looking to buy a stock with a price of $20 and a stop loss of $19, with a maximum loss of $2,000, you should buy 2,000 shares.

The formula for this approach is:

DollarRiskSize/(BuyPrice - StopPrice)

In this example, the DollarRiskSize is $2,000, the BuyPrice is $20 and the StopPrice is 19 giving a result of $2,000/($20 - $19) or 2,000 shares.

The above position sizing method  based on Van Tharp's recommendation.