| Before you enter the market you will need to decide | | | | account. For instance if you only want to risk 2% of |
| not only what to buy and when to buy it, but how | | | | your account don't put 10% of your account into any |
| much to buy. How many shares of stocks should you | | | | 1 trade unless you plan on cutting your losses short |
| buy to limit your risk? Here are some things to | | | | once it you lose 2% of your account. |
| consider when you decide that. | | | | 3. Are You Selling Calls on the Stock? |
| 1. How much capital do you Have? | | | | When you sell covered calls on a stock you have to |
| How much money do you have in your trading | | | | sell those calls in multiples of 100. That is something |
| account? This is the most important thing to consider | | | | you want to keep in mind. So if you want to place a |
| when you are deciding how much stock to buy. You | | | | covered calls trade don't buy 90 shares of a stock |
| don't want to have a large portion of your account in | | | | because you will not be able to sell anything. |
| 1 trade because if you lose money on that 1 trade it | | | | However this should not override the first two |
| could be devastating to your account. | | | | suggestions, you still have to keep in mind how much |
| 2. How Much are you willing to risk? | | | | you are willing to risk on that 1 trade. |
| You want to only risk a small amount of your capital | | | | Most people do not think about how much they |
| on any 1 trade. Once you figure out how much you | | | | should put into any 1 share of stock. This often |
| are comfortable risking you must factor it into your | | | | works against them in a big way. |