[brownsfan019]

Originally Posted by abuguapo »

Thanks (both) SpyderTrader and DugDug for the thoughtful responses - I'll take all your suggestions into account in forming my own strategy.

Thanks Brownsfan for keeping it real.

Does anyone have any suggestions about good resources on the topic? Anybody read anything that speaks to this specific issue?

Cheers,

gg

It's hard to follow a guide b/c it depends on your very specific situation. If you need to pull money weekly that's different than someone that can let it all just accumulate. It's also dependent on your profitability - are you making profits most days or not?

It's just a very personal thing and no one can say here's how to do it exactly.

My only general suggestion is that you shouldn't keep too much excess sitting in your futures accounts that earn zero interest. Keep enough to cover your trading but after that, get it out and into something earning interest. I realize bank accounts aren't paying much, but they are paying something. And as it builds and depending on your situation, you might want to start learning about tax-free bonds if your state has an income tax.

[daedalus]

When I first started making money consistently I started paying myself 10% a week of the profits because I wanted to grow my accounts primarily. But at the same time, you want to pay yourself something to make it all worth it.

For years while I learned I never paid myself a salary (even when I started to make money on occasion) and all I can say is that it wears you down psychologically because you never get any reward for your work. So some type of small compensation in the beginning is recommended if for no other reason that being able to go out to a restaurant at the end of the week and know that the markets are picking up the bill this time.

Personally i'm really scared of ever not being able to pay bills, etc on time so i've done a couple things...

As soon as you can afford to put money away into a "oh shit" savings fund to cover the expenses that can pop up at any time. I try to add to this fund every time I take money out of my trading account and continually grow it because I like having that added buffer in my life. Makes me feel all warm and fuzzy at night knowing that I have a backup should something bad happen in the markets, etc where I can't trade for awhile.

Beyond that, I budget yearly on what expenses i'm going to have (car payment, insurance, cell phone, rent/mortgage, food, etc) and put this money away ahead of time. Much like others in this thread I put money away towards these expenses each month FOR THE NEXT YEAR.

There is something for me mentally that having all of my living expenses paid for one year out that reduces stress on me and my trading. I don't like monthly bills so I pay all insurance/rent/cell phone bills in lump sums once a year. Upsides are this - I never have to worry about paying bills during the year, and a lot of times with rent or insurance you can get discounts for paying ahead of time. So it saves money as well. Most utility companies allow you to have a credit balance in your account (just as if you were to have overpaid on a bill) so I just overpay 13x's on my first bill of the month (one amount for each month + 1 extra buffer month) and am done with it. Of course you can still check the outstanding balance each month on your statements but you don't have to worry about pulling funds out of X, Y, Z, wiring them to A, and then bill paying them to B all the time.

Just a couple thoughts.

Cheers!

[robertm]

A lot of it will depend on your market/time frame. I know a lot of "FX Hero's" who became full time FX traders late last year. Most of them are back in jobs & haven't made money for 6 months +, markets change, sure you can adapt but some conditions are better than others for pulling in the $$'s.

If you rely on big longer term wins on equities then mid 2007-mid 2009 you probably didn't make much. It'll take years for those trades to gather momentum as well. Think of it like being a commission only salesperson working the big end of town. It may take years to close a deal, but then you get a big thumping commission check all in one hit.

Markets move in cycles, ensure you understand the cycles of the markets you want to trade (trend, congestion, range, volatility, duration), and what time frame to trade them on. Becoming a scalper isn't necessarily the path to full time trading, and certainly isn't everybody's cup of tea.

My own preference is to leave all my money in my trading float unless I need to use it (which doesn't mean it's sitting at a brokers). Risk management takes care of the rest, and living within my means (or as a mentor once put it, sometimes you dine on noodles, other times you dine out, the market will tell you which and when).

The more you have to lose, the more conservative you should be.

[The Henk]

Paying everything once a per year is a fantastic idea! I love the fact that by doing so you dont have to feel the stress of having to earn money each month for bills etc.

Ill take that advice!

Thank you!!!

Originally Posted by daedalus »

When I first started making money consistently I started paying myself 10% a week of the profits because I wanted to grow my accounts primarily. But at the same time, you want to pay yourself something to make it all worth it.

For years while I learned I never paid myself a salary (even when I started to make money on occasion) and all I can say is that it wears you down psychologically because you never get any reward for your work. So some type of small compensation in the beginning is recommended if for no other reason that being able to go out to a restaurant at the end of the week and know that the markets are picking up the bill this time.

Personally i'm really scared of ever not being able to pay bills, etc on time so i've done a couple things...

As soon as you can afford to put money away into a "oh shit" savings fund to cover the expenses that can pop up at any time. I try to add to this fund every time I take money out of my trading account and continually grow it because I like having that added buffer in my life. Makes me feel all warm and fuzzy at night knowing that I have a backup should something bad happen in the markets, etc where I can't trade for awhile.

Beyond that, I budget yearly on what expenses i'm going to have (car payment, insurance, cell phone, rent/mortgage, food, etc) and put this money away ahead of time. Much like others in this thread I put money away towards these expenses each month FOR THE NEXT YEAR.

There is something for me mentally that having all of my living expenses paid for one year out that reduces stress on me and my trading. I don't like monthly bills so I pay all insurance/rent/cell phone bills in lump sums once a year. Upsides are this - I never have to worry about paying bills during the year, and a lot of times with rent or insurance you can get discounts for paying ahead of time. So it saves money as well. Most utility companies allow you to have a credit balance in your account (just as if you were to have overpaid on a bill) so I just overpay 13x's on my first bill of the month (one amount for each month + 1 extra buffer month) and am done with it. Of course you can still check the outstanding balance each month on your statements but you don't have to worry about pulling funds out of X, Y, Z, wiring them to A, and then bill paying them to B all the time.

Just a couple thoughts.

Cheers!