Investing
If you are brand new to investing, you will need to work with a brokerage firm in order to place any trades we recommend. We have a complimentary list of brokers on our website. No person or company on that list should be considered as permitted to engage in rendering personalized investment, legal, or other professional advice as an agent of Money Map Press. Money Map Press does not receive any compensation for these services. Additionally, any individual services rendered to Money Map Press by the companies listed are considered completely separate from and outside the scope of services offered by Money Map Press. Any contact and resulting relationship is strictly between you and the company.
Once you’ve opened a brokerage account, if you are using a service that trades options, such as Tom Gentile’s services, you will need to apply for an options clearance. You can view our guide to obtaining options clearance here. If you are looking for more broker-specific information, you may also find our Options Approval Resource Guide helpful.
With a brokerage account set up, you are ready to trade! If you need a little more guidance on placing your very first trade, or on stocks or options in general, you can find additional information in our Training Center. There are also resources on cryptocurrency, precious metal and IPO trading here.
Since some of our publications either deal exclusively with options trading or contain the occasional option recommendation, we have put together a primer on options trading that you can download here. Please keep in mind that this should not be interpreted as personalized investment advice and is for educational purposes only.
We get this question a lot, and it’s impossible to answer, because every investor’s objectives and risk tolerance are different.
The short answer: That’s entirely up to you and your broker.
In general, we do recommend two risk management principles: 1) following a “position sizing” discipline that works for you and 2) using trailing stops to protect your principal and your profits. Beyond that, we can’t offer any advice about how much to invest in any position.
One rule of thumb you may want to follow is to make certain you don’t have any more than 2% of your risk capital exposed to any single investment (unless specifically advised by the editor). Studies show that this helps keep risk down to palatable levels, while still allowing you to build a diversified risk portfolio capable of stellar performance over time.
When your 2% max investment is combined with a 25% trailing stop, you should never lose more than 0.5% of the value of your total portfolio on any one play. Let’s say you have $100,000 to invest. The max you would put into any position is $2,000. And with a 25% trailing stop, the most you could ever lose in that play is $500 (1/200th of your total).
When it comes to controlling risk and position sizing, there are many rules, but one trumps them all… don’t play the game if you don’t have the cash to back it up.
Note: The Securities and Exchange Commission regulates the financial publication industry. Due to regulations enforced by this agency, we are prohibited from providing our customers with personalized investment advice. Because we are financial journalists – not advisors or brokers – newsletters and investment advisories should never be interpreted as personalized investment advice. Any decisions related to investment amounts should be left entirely up to you and your broker.
Money Map Press is not a broker, dealer, or licensed investment advisor. We are a publisher and are prohibited from providing individual investment advice. As a courtesy to our subscribers, we provide a list of brokers on our website. No person or company on that list should be considered as permitted to engage in rendering personalized investment, legal, or other professional advice as an agent of Money Map Press. Money Map Press does not receive any compensation for these services. Additionally, any individual services rendered to Money Map Press by the companies listed are considered completely separate from and outside the scope of services offered by Money Map Press. Any contact and resulting relationship is strictly between you and the company.