This is a great thread. I have been wondering this myself. Right now, unfortunately, I don't suffer from the problem of excess money in my account, but as I get better at this this challenge will surely present itself.
Iw ould say if you remoce a certain amount a side evry month it would be helpfull LEt say if a person is mking $3000 a month i would say to put $1500 a side as saving and use the rest in expenses It all depends on your average month u make.
Wow, the typing police is in force here. I better watch out! ...been wrist slapped, ouch. Never had the menial 180 wpm typing job. Always paid for secretarial services. Ebo, thanks for the spell check reminder. I just sort of slap-type my e-mail/posts, etc. I'll take the "if you can read" as a joke to a first-timer. E-mail is often wrought with typos, I see it her all the time. It's about getting a message across quickly, isn't it? And I know when it should be 'know' vs. 'no'. Give me a brake. There is often more bashing out here than help/constructive criticism. Must be the choppy markets or just diverse trading styles with various levels of success, and the frustrations are carried out in these posts.
Mostly 0.5% of my assets a month. Sometimes more for major purchases. The rest of the profits has to be saved for longer-term drawdowns.
Terrific question. Every Friday I withdraw my futures trading account down to the margin requirements (plus 20 %) to cover for the usual amount of contracts I typically trade plus the usual lot amounts for currency futures and occasional FX. I am very disciplined about this. I need to see this money in my regular bank account--like a regular "direct deposit" pay check from a real job, strangely, this is very important to me. It is a reward (or salary) for your weeks' work. I typically don't trade on Fridays as a rule. This withdrawn money is then used for business expenses, taxes, living expenses, etc. The remainder is placed into another separate trading account for my equity swing and position trades and option plays, as I don't day-trade stocks (only futures and some FX). Profits from this second account (successful swing trades and closed option positions), held with a separate broker, then feed into retirement instruments which includes ETFs, some bonds and mutual funds, and also used for larger personal purchases. But my weekly account withdrawals, down to the minimum requirements, is my bread-and-butter and it is how I pay myself, minus trading expenses, of course. THis form of money management is the only way I can make this activity pay for my lifestyle and keep me from the 70 hour a week career grind at an office with a 2+ hour daily commute. And don't get me started on that--any ex-environmental engineers or geologist /career changers out there?
Man daytrdr, you hit the nail with your last statement... A better question might be, how long did you compound before you started taking money out... For example: You start with 50K... at what point do you start taking some cash from your account? When your capital hits 150K-200K and then you start taking 10K out a month? 300K? 500K? Thoughts?
This is a great question on many different levels. When I was swing trading equities I had the usual up and down months, and after a while the money didn't feel real....just numbers on a screen. I was struggling to become consistently profitable and tried many different strategies. Finally, near the end of one year a few years ago, my wife asked me what I had made for the year. Well, after "explaining" (read - rationalizing) to her about "volatility", the need to increase account equity, and general market dynamics, she asked the question again. When I told her I was basically flat for the year (including commissions and other expenses), she said, "But I remember you telling me about some great profitable trades...what happened to the money"? My wife made a suggestion, she said, "I think you need more skin in the game" I agreed with her and immediately implemented a plan whereby I make a withdrawl at the end of the month of anything over 100k (a cash account at Scottrade - I wasn't using margin at all then). The goal was to keep 100k in the account and generate income. It worked beautifully, I immeadiatley became a better trader and ended up finishing the year with a nice little profit. Now flash forward to 2006: We live in the Bay Area and over New Years part of our home got flooded out. In Jan. we had to put in over 30k worth of major plumbing work - trench drains, and replacing the main sewer drain under the house. Our cash flow was tight so I decided to withdraw 20k from my trading account in early Jan. (a pay advance you might say). By the end of Jan. I had a profit of almost exactly 20k! This turned out to be one of my best months ever, and I had the actual cash (or I should say the plumbing contractor has the cash). A most interesting and enlightening experience. I started daytrading the ES in early Feb.this year. I still need to come up with a plan for paying myself from my futures account. At this point I'm not making much becasue I have a rule where I started with 1 contract and can only add 1 additional contract after each 2 weeks of profitbality. When I start swinging a bigger line I will start paying myslef monthly and keep my account static. My father, who worked as a stock broker for several years in the 1960s, is now retired and has actively traded for many years. When I would tell him about some great swing trade I had just made, he would say, "good, now go withdraw it and get it all in cold hard cash so you can run your fingers through it and know what it feels like". I didn't take his advice at the time because I was trying to "increase my account equity". I no longer hide behind that reason because I now have the equity I need to work with.