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How to manage your money as a stock trader

Everyone needs to have some good money management tips up their sleeve in order to keep their budget looking healthy. If you’re in the stock trading profession, however, it’s even more important to ensure that you have the skills required to stay afloat. From keeping on top of your budgets to using the many free resources out there; there are lots of ways to do this. Here, then, are some top tips on how to keep your financial arrangements in check when working as a stock trader.

Write everything down

 When trading, knowledge is power – and if you don’t manage to keep on top of your income and expenditure, you’ll soon be unable to recognize when you’ve profited or made a loss. Your chosen broker’s platform will probably be able to tell you at a glance how much profit or loss you’ve made on that specific platform, but if you trade in more than one place (or have done in the past) then you’ll need a master tracker which takes all of your data into account. A spreadsheet is a good way to do this, as it’s dynamic enough to be updated constantly.

Build up a float

As the old adage goes, you should never trade more than you can afford to lose. As a result, it’s wise to set aside a float of cash to use for trading – and then stick to it. That way, you’ll be able to make the necessary deposits required to create a sustainable profit flow – but you won’t constantly be borrowing from yourself and jeopardizing your financial situation. The alternative is to simply make continued bank transfers from your current account to your trading account, but this can end up impacting your personal cashflow and leave you unable to buy your essentials.

Take advantage of resources

Using the many (often free) resources available online is also wise if you’re an investor or trader. There are downloadable income and outgoings spreadsheets available on the web, and there are also tools available which can monitor your overall financial exposure to the stock market for you. There are also lots of financial journals and websites out there which can assist you.

The Bull gives great tips on both stocks to invest in and wider stock market trading skills, and there are plenty of other sites available as well. Buying books and eBooks which cover trading is wise – although it’s worth remembering that the market for that kind of publication is quite saturated, and you’ll need to do a quality and reviews check before you make a purchase.

If you’re going to be a trader, it’s pretty much essential that you learn the skills of money management. If you don’t, it’s likely that you’ll fail at the first hurdle – or, even worse, you’ll plough on without truly knowing how you’re doing. By getting a budget spreadsheet going and using some of the many available resources, though, you’ll quickly have it covered.