Using Account Balance as Money Managment

Discussion in 'Risk Management' started by virtualmoney, Jul 31, 2008.

  1. If you have a strategy that makes >100% a month but the unrealised floating losses can be as large as 50% a month, is there an optimal way to manage such a method? How would you calculate how much and often to withdraw in % from this acct?
  2. MGJ


    Yes there is an optimum way to manage the account. However it is different for each trader. For Trader A, the optimum plan is to withdraw 10% of the account each quarter. For trader B, the optimum approach is to add $500 to the account each month. The trick is to decide what is optimum for you. What are your requirements? What are your desires? What is your "utility of wealth function?" Each trader answers differently, thus each trader has a different optimum management strategy.