## Share sizing you trades right

How many shares should I take and what risk amount do I need to use?

The first question that needs to be answer is how much are you willing to loss

How much of your capital should you risk 1%, 2% 5% or even 10%? Then the question from what, you total portfolio or the money you invest in a trade. So let's me ask you a different question. Are you willing to loss on a trade100, 200 or a 1000 dollar?

Focus on this question “How much money am I convertible willing to losing if the trade goes against me”.

That’s quite different right

The system I gone explain can be used on anything from day trading to swing trading and it’s the only one I really understand. Now let’s move on.

NOTE before we go. Your risk amount in not the money that is needed to invest in a trade

#### How to set your risk amount

Therefore you need 2 things.

Entry price – stop price = stop size (cent)

Then for calculating the amount of shares,

Divide your risk amount by the stop size (Risk / stop size)

For example

Let’s assume your risk is \$100,-

(Remember this is the amount of money your will to loss if your stop is hit)

For example:

You want to enter a stock at 10 dollar and you have a put your stop at 9,70

Then your stop size is 10 – 9,70 = 0,30 cent

Dividend then your risk by this number 100/0.30 = 333 shares this is the amount of shares I can take with a 30 cent stop.