As traders we dont have a steady income. At the end of a profitable week, or month, how do you figure out how much to take out of your account, and how much to leave in?
I will speak for myself, and every other trader. There is no such thing as "Job security" in trading. One week you might make 5k, next week, nothing or not much.
It doesnt have to be this way, it depends on how you trade. I personally have developed my trading to a level where I have a pretty good idea of how I will do from week to week. Of course, with so many variables, most traders dont have a way to be very consistent but I put consistency at the top of my list and, therefore, my trading results reflect this. I do understand that, in order to start having bigger than 30k months, I will have to sacrifice consistency in order to strive for greater gains but it certainly won't happen overnight. Hopefully my drawdowns wont be terribly substantial finding out.
It is part of my business plan to pay myself every Friday. Every Friday I wire money into my bank account. This habit reminds me that trading is a job. I do it to pay my bills. I have found from experience that it is not a good idea to keep profits in my trading account. In the past I have made the mistake of increasing my size because I had more money in my account. This is not a good reason to increase size. Now when I decide to trade larger size I put more money back into my trading account. It is a rational business decision not a decision I make on the fly.
I wire money out whenever I need it. I have financial plan that I use as a guide. Keeping capital in my account reduces my carrying costs significantly, so I keep quite a bit in there. Having built up quite a bit in profits lets met take more risk, more size, and increases my profits. One of my core strategies, is a position trading approach that when I'm making money is very easily scaled. Each dollar I leave in there allows me to increase my positions by a factor of 6. If you assume a 8% return, that means I can get 48% on every dollar I leave in. I don't really track % returns, I like to think in terms of dollars made, but you get the idea.
I just noticed in another thread you say you are a "swing" trader. I am a scalper/active day trader. Basically I take whatever the market provides me. I only daytrade. I never hold anything overnight. This is the reason I am able to pay myself every week. On any given week I will make between 250-1000 trades. I have proven that with this trade activity I will be profitable by the end of the week.
So you hope that the more volume you trade each week, you'll = higher $$ returns?. Am I understanding you right?
Yea, which is why I started this thread. I might make a nice gain in the first three days, then watch it melt away to nothing, then the next three days might be double, and the next three days might reduce all gains to zero. When you hold overnight you put yourself at the mercy of the market, but when you scalp, you instantly know what you p/l is at any moment.