Good Money Management Practices
- Only use money that you do not need for living expenses.
- Do not put more money at risk than what you have.
- Investing and using a credit line or leverage (e.g., futures, options) should only be done with money you can afford to lose in full.
- Depending on the amount of starting capital, you must spread the money among several stocks.
- You must limit the loss in a single trade to 1% up to a maximum of 2% of your portfolio’s total value.
- You must limit the loss in one trade to no more than a 15% maximum of the trade value.
- If your starting capital is too low to invest in more stocks, you can use an Exchange Traded Fund (ETF) tracker of a stock index. The index takes care of the necessary stock risk spread.