Posted by: eminitrader May 2, 2009
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One of the things that many new people struggle is regarding how many shares to buy. Let's assume that you have $5,000 in your account. You do not want to risk more than 5-10% on any trade. The larger your account is, the less you should risk as a % of your capital.


Let's assume that the trigger price is $5 and the stop is at $3, that is a risk of $2 per share. Since you are risking $250 - $500 per trade, you should buy 125 - 250 shares only. Once you get 30-40%, you should take half off.


 

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