Portfolio Size and Risk Management
By All About Trends
Success in the stock market is all about risk management — not biting off more than you can chew in any one stock.For us, we recommend not investing more than 5% of your portfolio balance in any one position. This means you maximum investments will be as follows:
- $1,250 on a $25,000 account
- $2,500 on a $50,000 account
- $5,000 on a $100,000 account
We recognize that the portfolio balance of our subscribers varies. As a result, we are going to implement the following to make it easier for you to trade in tandem with us and feel more confident about taking the trades we feature.
1. Each trade trigger alert going forward will include how many shares we are buying based on our current portfolio balance BUT will also include how many shares you should buy based on the portfolio balances of $25k, $50k and $100k.
2. On the Performance section of our paid subscriber web site, we will now track performance based on the following:
- Our portfolio
- A $25,000 portfolio
- A $50,000 portfolio
- A $100,000 portfolio
Here's how your portfolio would look if you had $25,000 and put the maximum $1,250 in each of our current positions:
As the chart above shows, if you had a portfolio of $25,000 and simply invested just 5% or $1,250 in each of the trades we've issued issued Trade Trigger alerts on in the past month, you'd have a profit of almost $1,100. And to earn this, you were never more than 50% invested — so that's a gain of almost $1,100 on less than half of your $25,000 account! Now take a $1,000 gain per month out over a year's time and you have a return of $12,000 or just under 50% of your portfolio!!! — again all with having no more than half of your account invested.
Current balances and performance of all of our current positions are updated at the close of each trading day. To access this information, simply go to our web site, enter your username and password, click on performance in the menu on the top right corner.
We hope these changes will help each of you in your risk management techniques and make it easier for you to trade in tandem with us and profit accordingly. The following has been an excerpt from today's update by All About Trends. Premium members receive daily market commentary and stock picks, a weekend wrap-up, and a concise trading plan. I personally recommend their service for their insightful content, trading methodology, and value. Try it here at a significant discount.
The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.