Trading Tip

Trading Tip
 

How much should I trade with?

 

That's a great question.  And one that can only be answered completely by you, the trader.  Here's what I mean.

 

There are many factors involved in the trading process, and in each individual trader.  Every trader has a different risk tolerance and a different trading "personality".  When it comes to making a good return on a trade, here's a few things to consider...

 

Who are you getting your trade ideas from?  Do they have a proven record of success?  What kind of trades do they typically produce?  Day trades that move big in a single trading session, swing trades that take a few days to produce decent gains, or duds that barely move at all?  Or, even worse, trades that fall like a rock from the opening bell.

 

Don't get me wrong here.  I don't know anyone who never puts out a dud, even me. But you should be following someone's trade ideas who puts out winners, at least most of the time, which we try our hardest to do.

 

It's important to know what kind of trade you are entering.  Most of our trades are for day trading only, which sometimes may only move as little as 15-20%, but on the other hand, may move several hundred percent, with a few trades here and there that are great swing trades.  With that being said, we must look at percentages.

 

If you enter a trade with $100, and that is a day trade that moves only 20%, you have likely only broke even, just clearing your commission fees.  Think about it... $100 x 20% = $20.

 

Now, take the same trade, moving 20%, but you used $1000 to enter the trade.  Now, you not only cleared your commissions, but you made $180, and likely only in a matter of just a few minutes.

 

Plus, if the trade really takes off... even better.  Your $1000 could double or triple, as we have seen many times, in a matter of minutes to days.

 

Calculate your own trading style and what kind of picks you are following and then determine how much to use per trade.  The old addage still holds true: It's easier to make it the more you have in it (in the trade).