How much should I put in each trade?
First, its critical that you do not have your entire trading portfolio dedicated to options. You must stay diversified so you are not only protected against unexpected market volatility, but also so youre well-positioned to profit from any significant moves higher. You should still have your staple investments while dedicating a small portion of your total portfolio to options trading.
Second, you need to plan accordingly when trading the Precision Profits service. We have an average of four to five positions open at any given time. However, there will be times when we can have as many as 10 trades open at once or as few as two or three positions open. If you are allocating $10,000 to this service, you might consider devoting $1,000 per trade.
This will help build your confidence and experience. And it is always best to do some of your own research, even if you are using a service like this one, because the risk/reward for a certain position might not be at your tolerance level. Either way, well help get you going in the right direction.
Ultimately, the decision is up to you.
You should only trade the number of contracts you feel comfortable with. Jeff suggests purchasing at least two contracts for each trade, because he frequently suggests selling half the position to lock in profits, while letting the other half ride for bigger gains down the road. But if you can only trade one contract, no worries. Just sell that contract when he recommends selling the first half of your position.
Whatever strategy you apply, stick to it religiously. You never know when a loser will come along, and if youve put too much of your profits into the wrong trade, you could erode your returns.
In the end, its up to what you feel comfortable with. For the purposes of our portfolio, though, we value each holding as being equally weighted.