By: Tom Gentile
on April 12th, 2022
Skill #4 Master Money Management Diversification
Diversification is a great way to get started with money management, and you can accomplish it simply by putting your system to work in more than one stock or asset class.
As for specific trades, try using the 5/20 rule: No more than 5% risk in any one trade, and no more than 20% of your portfolio in any one industry sector.
For More Advanced Traders
For those of you who consider yourselves more advanced traders, consider using more elaborate money management systems.
Several different kinds are available, ranging from value investing to fixed fractional and even the famous money carlo system.
Study them to determine what works best for you and your trading.
An Interesting Way to Gain more Experience in Trading
Spending some time in front of your television set watching one of the many poker playing tournaments.
Eventually, as you watch these championships, you’ll begin to recognize the same familiar faces at the final table. Are they just lucky? No. Rather, they have a constructive set of money management that they apply to their game.
They understand the probability that any given poker hand cab win or lose, and they cut out early if things don’t look good.
KEY TIP: Use the Portfolio Management Tools in my Software
Visit www.tomsoptiontools.com and sign up if you’re not already a member. Then:
Log in > Trades > Portfolio > Performance is the sequence to follow to get your trading summary that you can study, analyze, and see what you need to improve upon.
App: Toms Option Tools
Market Insight articles may show images of lists of stocks meeting a variety of options parameters like Unusual Call and or Put activity or Expensive IV found on my app Toms Option Tools.
Other times I will have other charts may work to amplify my educational points.
Those options data lists, however, can be found on my app Tom’s Option Tools. Use your device to search up and download this app and get free access to the Morning Reports section of the app.
Other parts of the app are available at a premium subscription rate, but the Morning Reports Lists are yours free.