Ready to buy some stocks, but don't know how many to buy? This post is for you! Today, we are going to talk about position sizing and how to determine the best size for your accounts.
The rule that I follow is that any entry into a stock is limited to roughly 1% of my portfolio equity. So, for instance if I have a 100k account then I purchase the amount of stock that equals around $1000.00. That's it.. simple!
Don't want to break out a calculator, then here are some examples you could follow:
100k equity account:
Starting to see a pattern??
The calculation is: Equity * 1%.
30k equity account:
How do I make any money with buying this number of stocks? Good question! The strategy that I use is built on repositioning and averaging down or up on stocks when they become volatile. Many times, this gives me a better entry point and allows me to exit the position faster with still making decent profits. Basically, if you go into the trade HOT, you will get BURNED! Stay conservative and you will see more gains than losses.
Goodluck!