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Brian Hale
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“When it comes to investing, the saying ‘don’t put all your eggs in one basket’ couldn’t be truer, especially regarding the diversification of one’s investments. This phrase originates from a tale about a farmer who had a basket of eggs and was carrying it to market to sell. Along the way, he stumbled, and the basket fell, breaking all the eggs. The farmer learned from the bitter experience as he knew that it was foolish to put all of his eggs in one basket. So, he decided to distribute the eggs between more baskets so that if he lost one basket, he still had eggs to sell.”
― FUNDAMENTAL ANALYSIS ESSENTIALS: Master the Art of Assessing a Company’s Value, Reading Financial Statements, Calculating Ratios and Setting a Buy Target
― FUNDAMENTAL ANALYSIS ESSENTIALS: Master the Art of Assessing a Company’s Value, Reading Financial Statements, Calculating Ratios and Setting a Buy Target
“Let’s say you have a $10,000 account, which means you can risk $100 per trade (1%). So, you buy a stock at $200 and place a stop-loss at $196, making your trade risk $4. Stocks: $100 / $4 = 25 shares. Twenty-five shares are your ideal position size for this trade because you are risking exactly 1% of your account based on your entry and stop-loss. The trade costs you 25 shares x $100 = $2,500. You have enough money in the account to make this trade, so leverage is not required. You can also use a position sizing calculator to determine the appropriate number of shares to buy or sell based on your risk tolerance and other factors. There are many position-sizing calculators online, so feel free to check them out and choose the one you like. There you have it––the five-step process to determine your position size. Finally, it is important to review your position size regularly. Doing so will ensure that it remains appropriate for your risk tolerance and other factors. The next chapter discusses the importance of adopting a long-term perspective to trading and investing in stocks.”
― Trading Strategies 101: Discover the Psychology of a successful Trader, How to Use Simple Trading and Tools to Thrive in Bull, Bear, and Sideways Markets
― Trading Strategies 101: Discover the Psychology of a successful Trader, How to Use Simple Trading and Tools to Thrive in Bull, Bear, and Sideways Markets
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