Never trade with urgency money – urgency money is money that you need to feed your family, pay for your kid’s education, money you need to pay for your monthly bills. Trading with this kind of money will put you into a dangerous position. You are putting your family at risk.

Maximum 5% of your total portfolio per trade – for a $10,000 trading account, $500 is the maximum amount that you can place on a trade. Never in any circumstances, no matter how potential may the trade appear to be, stick to your 5% rule. For bigger accounts risk only 2%.

Maximum at risk positions – this can be set by the numbers of open active positions. It can be just 2 when you are just starting out and you gradually increase it to maybe 8. Never utilize all your trading capital. For options trading you’ll need some capital to buy back the stock if you are assigned. Always leave about 35% in your account at all times.

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