Happy Friday, traders…

Ben here. 

One of the most important aspects of trading is also one of the least discussed… 

Everyone wants to talk about charts, setups, entries, and exits. And while there’s nothing wrong with that … you might be missing a crucial piece of the puzzle. 

You can master every technical skill in the stock market. But if you fail at this one thing, nothing else will matter … you’ll be doomed.

In case you haven’t guessed, I’m talking about personal money management.

How you manage your bankroll and personal expenses can greatly affect your trading performance…

After all, the stock market is driven by capital. If you can’t manage your money well, you won’t be able to succeed as a trader. 

With that in mind, here are three simple steps that have helped me manage my money over 20+ years of trading…

Step #1: Break Down Your Budget

First things first, create a simple spreadsheet of your monthly budget…

Ask yourself:

• Are you risking an amount of capital that you’re comfortable with? 
• Are you saving enough for taxes? 
• Can you cover all of your everyday living expenses and still afford to trade?
• How much do you make per month? 
• How much do you spend per month? 

The difference between the last two is your expendable income, a part of which you’ll need to dedicate to trading.

Only you can decide what portion of your income (or savings) you’re willing to risk in the stock market.

There are even greater considerations if you have children (like me). You need to be positive that you can support your family while trading. 

Every person has a different risk tolerance. Some people love to gamble and spend, while others pinch pennies and frugally save.

Maybe you’ll have some incredible beginner’s luck … funding your trading account only once and growing it from there.

But don’t expect this. Many newbies need to fund their accounts more than once in the beginning. There’s nothing wrong with that — especially if you don’t have a large savings account to pull from.

Additionally, there’s nothing wrong with having a steady job while part-time trading.

This can be an excellent way for newbies to dip their toes into the stock market without relying on it for income. 

Step #2: Never Risk More Than You’re Willing to Lose

Before you make any deposit into your trading account, ask yourself … how would you feel if you lost 100% of that money?

Of course, the plan is to grow the money. And if you study hard and apply yourself, that’ll probably happen for you.

But you can’t ignore the possibility that your first few trades will go south and take your hard-earned money with them.

And if this happens, you want to make sure you’re risking expendable income. 

If losing your initial small-account capital would put a serious strain on your lifestyle, then you’re trading with too much size.

Obviously, you need to be able to cover your basic expenses, but there’s another reason to consider this as well…

You won’t make the best decisions if you need the money you’re trading with.

You’ll be too emotionally attached to that money, which could lead to making mistakes while you’re actively trading. 

On the other hand, if you can find the perfect account size — one that gives you slack to make decent money but doesn’t make you lose your stomach every time a dip occurs — you could become an unstoppable trader.

Step #3: Set Aside 25% of Profits for Taxes

Taxes on options can be very confusing, especially to anyone new to the options market. 

But as always, Uncle Sam has to get his piece of the proverbial pie…

Options contracts are taxed based on a 60/40 split between the long and short-term capital gains rates.

This means that 60% of the gain (or loss) is taxed at the long-term rate, while 40% is taxed at the short-term rate.

These rates depend on your taxable income and filing status.

But as a general rule of thumb, you should be setting aside a minimum of 25% of any profits you make for taxes.

You may end up paying a lower % owed at the end of the year, but it’s better to be safe than sorry.

I also recommend working with a professional tax consultant.

It’s a small price to pay to a professional who’ll help you avoid being slapped with fines or penalties later on down the road.

These three steps are about clearing unnecessary stress from your mind while you’re trading. 

Make sure your finances are in order. That way, you can focus on what matters — trading — without letting emotions get in the way. 

Break down your budget, never risk more than you’re willing to lose, and always set aside money for taxes.

It may not be the most fun part of being a trader, but personal money management is vital to your success as one.

💰The Biggest Smart-Money Bets of the Day💰

• $9.9 million bullish bet on MU 11/15/2024 $115 calls @ $6.07 avg. (seen on 9/26)

• $9.7 million bullish bet on VLO 12/20/2024 $150 calls @ $3.30 avg. (seen on 9/26)

• $8 million bullish bet on COIN 10/04/2024 $187.50 calls @ $3.65 avg. (seen on 9/26)

Have a great weekend,

Ben Sturgill

P.S. There are hundreds of ‘smart money’ sweeps to choose from every day on my SPYDER Scanner…

These exact setups have led to recent gains of 168% on GOOGL, 253% on CCJ, and even a staggering 300% on INTC!*

So, if you want to start nailing trades like those…

Join my colleague Danny Phee THIS SUNDAY, September 29 at 3 p.m. EST to see the most promising ‘smart money’ setups for next week. 

Seats are limited — Reserve yours before it’s too late!