The most costly mistake that amateur traders make is to not use proper portfolio allocation.
Invest in too many stocks, and you hurt the monetary growth of your account.
Invest in too few stocks, and you can get wiped out quickly.
At GuerillaStockTrading we recommend a portfolio with fewer holdings. Here are the general rules for your portfolio.
$300 – $1,500 = 1 stock
$1,500 – $3,000 = 2 stocks
$3,000 – $5,000 = 3 stocks
$5,000 – $7,500 = 4 stocks
$7,500 – $10,000 = 5 stocks
$10,000 – $15,000 = 6 stocks
$15,000 – $20,000 = 7 stocks
… and for ever $5,000 after, add an additional 1 stock to your holdings.
When picking your stocks, remember, start out with a list of a hundred stocks then narrow them down to a handful before making your final choice.
I hope you enjoyed this article and feel free to leave any comments you have below. Thank you and happy improved trading.
Lance Jepsen
President, GuerillaStockTrading.com
Your Trading Coach
(because everyone, even Tiger Woods, needs a coach)
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