Since we are all systematic in our trading, I would like to know if anyone has a systematic payroll to themselves or how they determine what to withdraw for living purposes. Obviously, it depends on the size of your capital. Do you withdraw a certain % of profits? of fixed amounts like a salary?
I ask it in the hopes of someday making enough to have monthly withdraws...and any bonuses...almost like a hedge fund
The answer to this will vary by the number of people who respond I'm sure. I for one take out taxes due on 12/31/xx and put them aside - reducing my risk equity accordingly. Then, through the year, whenever risk equity exceeds my "base equity" by more than 10 - 15% I'll take out th excess - there is no predicting when this will occur. Usually it is after a pretty good run where something I'm in really takes off (goes parabolic). Taking "drawings" like this means you can't depend on your trading for living expenses. I make sure I have enough elsewhere to fund my trading for at least 12 months forward - even if I lose 100% of my trading capital. Not many backtesting platforms provide for this kind of thing, but TradingBlox does.
Depend what typing of trading you are using, this will make a big difference on how you pay yourself. Day trading is the easiest to pay yourself. swing trading is second. for the longer term trading you might as well have a second job. When I day traded whatever my net profit for the month is, that is consider my salary minus repaying my bankroll(extra cash for draw downs), assuming I am successful. This of course assuming my bankroll is able to cover the month to month draw down of my system. As for swing trading it is the same but I have to decide to get out of trades at the end of the month or wait until my exit point.
not many people must may themselves on here i guess does anyone use a fixed salary system? (with or without superior performance bonuses). Or maybe no one has enough confidence in consistently earning a profit.
It is funny, but I have yet taken 1 cent out of my trading profits. I still live in the same apartment I bought before I started, drive the same car (a '94, but I live in manhattan, so just having a car is a luxury). I actually spend substantially less than when I was employed, since I don't have to buy suits anymore, and the amount of annual vacation I take has decreased as well. So in a way, I am still living off of my savings, with my trading equity sitting there untouched.
I think a way to get a salary in this job is to manage a hedge fund of, oh, say a modest $50million or so. Take the mandatory 2% management fee to pay overhead, staff and, oh, your own meager salary of say $250K a year. Then simply string that along as long as it will last (survivor bias) and, heh presto, you've making a mint with OPM. Best of all, when you make a quarterly profit you get to take an extra 20% off the top and stuff it in your (and your partner's) back pockets and you don't have to pay it back the next quarter when you lose it all back - that's the best deal out there going. Myself, I'd rather trade my own account, avoid all the hassel of clients, and pay myself based on performance - you get the good with the bad. Viewing trading as a means to earn a regular salary does not work IMHO unless you either run a fund or work for somebody who does.
i wire funds to my credit union account once a month {wifes account she uses} and the main spending i do is out of one of my brokerage accounts {checks and Visa debit card access}. so i just make a regular transfer into my sweep account at the brokerage twice a month. i do my taxes quarterly so i just write a check from the brokerage sweep account {the depressing quarterly event -- HAHAHAHA!}.
What, no salary! OK, you no this is coming--why do it? OK, there is alot of psychological/emotional reasons to self-employment, but no salary means this is an expensive hobby for you. Like Casino boat gambling. This should be about trading for a living. We all had/have careers that we left or want to leave. Trading is the alernative and a chance at a gateway to some real wealth.