7 Rules of Money Management in the Stock Market:
Let’s get one thing straight: the stock market isn’t a casino, and if you’re treating it like one, you’re already losing. Winning in the market isn’t about luck—it’s about strategy, discipline, and knowing how to play the game better than everyone else. If you want to win, you need to follow the rules because really on 3% of traders make it full time. And not just any rules—my rules. Here’s how you manage your money in the stock market like a pro.
1. Never Get Emotional
Listen up, because this is non-negotiable. The moment you let fear or greed drive your decisions, you’ve lost. The market doesn’t care about your feelings. It doesn’t care if you’re having a bad day or if you’re riding a high from your last win. What matters is the cold, hard numbers. If you can’t separate your emotions from your trades, you’re not cut out for this. Stay sharp, stay focused, and never let the market see you sweat.
2. Always Think Risk vs. Reward
Here’s a simple question: what’s the upside, and what’s the downside? If you can’t answer that before every trade, you’re gambling, not trading. I don’t gamble, and neither should you. Every move you make should have a clear risk-reward ratio. Aim for setups where the potential reward outweighs the risk by at least 4:1. If it doesn’t, walk away. There’s always another opportunity, but you only get one shot at protecting your capital.
3. Find Low-Risk Setups
I don’t take unnecessary risks, and neither should you. The best traders aren’t the ones swinging for the fences—they’re the ones who consistently find low-risk, high-probability setups. Look for stocks with strong support levels, clear trends, and favorable technical indicators. If the setup doesn’t scream “low risk,” it’s not worth your time. Remember, the goal isn’t to be a hero—it’s to win trade by trade towards wealth.
4. Hold Onto Winners and Trim Your Losers
Here’s a hard truth: most traders do the exact opposite of what they should. They cut their winners short and let their losers run. Don’t be one of them. When you’re in a winning trade, let it ride. And when you’re in a losing trade, cut it loose. Fast. The market doesn’t reward loyalty—it rewards smart decisions. So, hold your winners, ditch your losers, and don’t look back.
5. Don’t Worry About Being Right; Worry About Making Money and Managing Risk
Let me make this clear: your ego has no place in trading. I don’t care if you’re right or wrong—I care if you’re making money. The best traders in the world are wrong more often than they’re right, but they still come out on top because they know how to manage risk. Focus on the process, not the outcome of any single trade. Protect your capital, and the profits will follow.
6. Understand Your System, Have a System, and Don’t Trade Without a System/Strategy
If you’re trading without a system, you’re just throwing darts in the dark. And guess what? The market doesn’t reward amateurs. Your system is your edge—it’s what separates you from the herd. It should include clear rules for entry, exit, position sizing, and risk management. And once you have it, stick to it. No exceptions. If you don’t have a system, get one. And if you can’t follow it, get out of the game.
7. Do the Work to Find the Stocks and Study to Structure Your Trading
Let’s be real: success doesn’t come to those who wait—it comes to those who work. If you’re not putting in the time to research stocks, analyze charts, and stay informed, you’re not serious about winning. The market rewards preparation, not luck. So, do the work. Study the patterns. Know your stocks inside and out. And keep a trading journal to track your progress. If you’re not willing to put in the effort, don’t expect results.
Final Thoughts
Here’s the bottom line: the stock market is a battlefield, and if you want to win, you need to play by the rules. My rules. Never get emotional. Always think risk vs. reward. Find low-risk setups. Hold your winners and cut your losers. Focus on making money, not being right. Have a system and stick to it. And most importantly, do the work. If you can follow these rules, you’ll not only survive in the market—you’ll thrive.
Now go out there and win. Because in this life, why settle for average? Why settle for a life that is not to your full potential.