How much of my net worth should I allocate to trading? I'm relatively new to trading, and have founding conflicting information online.
Brokerpedia is a trademark of Media Vest FZ-LLC, a company incorporated in the United Arab Emirates with license number 101647. Information published on this website is not directed at residents of the United Arab Emirates and is not intended for use by any person in any jurisdiction where such use would be contrary to local law or regulation.
3 comments
I think it really depends on your experience and risk tolerance. For beginners, I’d say start small. Maybe 5-10% of your net worth. You don’t want to risk too much while you’re still learning the ropes.
I agree with @mohamed23. When I first started, I kept it to around 5%. As you gain more experience and confidence, you can increase that amount. But even as an experienced trader, I’d say keep it to a max of 20-25% of your net worth.
Hi @carlosjunior, I have a slightly different take on this. If you're new to trading, I'd encourage you to size your trading portfolio as a percentage of your monthly income.
For example, if you earn $2,000 per month after tax, invest no more than 5 to 10% in an online trading account. This amounts to between $100 and $200 per month.
It's a relatively small amount that won't put your financial health at risk if the markets move against you. And if you're looking for ways to make that investment go further, you could use leverage to open larger positions.