When do you withdraw your profits to your savings account?

Discussion in 'Risk Management' started by Longcat1982, Jul 31, 2009.

  1. I've heard recommendations that you should withdraw your profits from your brokerage account periodically rather than keep reinvesting them to produce a steady stream of income. As a noob, what the best time to withdraw?

    When you've broken even?
    Say you start with $10000 in Sept 2008 and lost a bunch over the next few months but then managed to break even to $11000 now. Then you take the $1000 out and wire it to your savings.

    Or when you've had a positive return for that particular month? Say you're at $10000 in Sept 2008, $8000 in Oct 2008, then $9000 in Nov 2008. In Nov 2008, you withdraw the $1000 monthly profit.

    Which scheme is more preferable for a newcomer?
  2. i get paid every week to reward myself accordingly..........anything in excess of my starting balance gets ach`d out friday afternoon before my friday routine of sushi & massage & then i start fresh monday morning.......very important for me to start with a clean slate monday as this allows me easy,clean accounting records & i always know where i am on the week & i don`t jeopardize profit......if i`m negative on the week,then that`s the deficit i must overcome to get paid,plain & simple.

    goal is to win your fight as every day is "the" fight".......which allows you to win the war....which is weeks end with defense always,always being paramount as cash is king & requires protection at all times.

    keep in mind that this is an ES/CL swing/short term acct that very rarely carries positions over the weekends.
  3. This is like any other job - you pay yourself regularly. I pay myself every 2 weeks. If I had a drawdown during the 2 weeks, I'll skip a payday. I build my account base slowly, using a formula which I developed. So far, has worked well.

  4. So, you're already profitable?
  5. I have a trading account and an investing account and trading profits goes into my investing account.
  6. this is a personal decision. If you have a small account, and plan on trading a similar amount, it might be preferable to have a better financed account. There is a direct relationship between being undercapitalized and blowing out.

    If you plan to leverage yourself based on the amount in the account, it might be better to keep it small

    Most newbies are not profitable anyway or THINK they will be profitable. 100% of the new traders expect to be in the 5% of traders who do not lose their trading capital.

    Further, many new traders do not grasp the advice to only risk money you can easily afford to lose. They have $12,000 total in the bank, and send $11,000 in to their new account. Huge mistake.

    This really is a personal decision. Most of what you hear is going to be opinions. It doesn't mean it is what you should do. Without statistical testing on what happens in each case, it will be hard to prove what really happens.
  7. Nattdog


    if you just started had a big drawdown and are back to 1k over the 10k you started with, there is no evidence at all you have an edge so any withdraw is basically a withdraw of principal.

    10k is way to small an account to consider withdrawing funds from regularly to cover expenses. Serious traders usually have substantial cash buffer accounts to meet normal expense needs.

    Your only goal with 10k should be growth and capital appreciation, or building a good record to trade someone else's money.
  8. I withdraw my profits regularly . Normally I do not compound them in my capital. I am not a professional trader . may be I loose my profit in next trade so I want to enjoy them instantly. I monthly collect more than 100$ profit .