First off thx everyone for the replies there has been a couple of very solid comments in this thread. I guess if i was to give you a timeline by years it would be as follows. 2004 - Started prop at the age of 21, ended up making good coin after six months final quarter 2004 - made roughly 400k in 3 months on a system which was extremely consistent (won almost every day) only 200k was mine. First quarter of 2005 - opened up personal trading account to go with company one, and lost all of my 2004 profits. This created a big problem with the IRS as i owed taxes on 2004 profits and had nothing to pay them with. Rest of 2005 until now - restarted designing new system had all kinds of government leans on me, money getting direct withdrawl from my account. basically since then been designing new system and now finally have something which is extremely consistent again, and now i am finally caught up on my tax burden, it is not like i have been suffering, i am still making a decent living but i know that this system is now working the way the other one worked and i want to start going in hard on it, but i need exactly what i am making a month and can not afford drawdowns. I don't understand why i am able to make exactly what i need a month without any problems now but cannot step over that threshhold. And for other people who have commented in this thread this was by no means martingale, i do not average down it wasd just a total failure of an arbitrage opportunity i had figured out.
Common mistake made by many, I'm sure. Next time you end a year with a gain, put your estimated tax liability in a CD till April. This has been my problem as well, but I just thought of an idea: Make up a budget that's 10x what you need a month and post it where you can see it at all times during the trading day.
I don't understand it. Right there. As soon as 2004 Q4 closed out, you need to roughly estimate your income tax liability for 2004, and withdraw enough money to cover the taxes. You need to send in the estimated tax payment Q4-2004 by Janurary 15 of 2005. The fact that you leave the profit money in the pot, and you don't have other personal savings to cover the income tax liability, is the same as you use borrowed money (borrowed from IRS) to trade. If you lose your pot, you will become insolvent. Having said that... I am one of those who had gone through years of losing, or break-even at best, before I became consistently profitable. The fact that you are successful so early on in your trading career, that's commendable!
i/ve heard it said that all traders seem to go thru a cluster of good trades and bad trades....in many ways making so much money so quickly can easily lead to over confidence and over trading.... you have lost your psychological capital, for now. take a break, go do something else, even if it doesn't pay as much.