How to buy
Before entering the market, you need to decide not only what to buy, when to buy, but also how much to buy. How much stock should you buy to limit your risk? Here are some things to consider when you decide.
1. How much money do you have?
How much is in your trading account? This is the most important thing when you decide how much to buy. You do not want to have a majority of accounts in a deal because if you lose money in this 1 transaction it could be devastating to your account.
2. How much risk are you willing to take?
You want to take only a small portion of the capital in any one transaction. Once you know how comfortable you feel at risk, you must incorporate it into your account. For example, if you only want to take 2% of the account without taking 10% of your account for any 1 deal, unless you intend to cut your losses once you lose 2% of your account.
3. Do you sell on the stock?
When you sell covered telephones on shares, you must sell them at multiples of 100. This is what you want to remember. So if you want to place a covered phone transaction do not buy 90 shares because you will not be able to sell anything. However, this should not cover the first two recommendations, and you still have to remember how much you are willing to risk in this transaction.