[CandleWhisperer]

Originally Posted by daedalus »

...The OP brings up an interesting point about taking that money out at the end of each month so it doesn't influence you're trade size and you don't get in over you're head. Part of me agrees with this logic (I can see where it could cause problems) and part of me disagrees. I disagree from the standpoint that if you are trading 1 lot per X amount of money then your $ risk per lot is 1Y. If you increase your account size to 2X then you can trade 2 lots with still only risking that initial 1Y. So be it 10 lots on 100k or 1 lot on 10k i'm still risking the same $ per lot. That makes me think why not trade bigger size as your account grows? Its the same $ risk is it not?.....

Thank you for the response. I am shocked at the lack of them for such an important topic.

Anyway, the point had to do more with a trader's psychological make up than a strict risk/reward equation. It is possible to increase position size in such a way as to keep the r/r the same as you pointed out, but the accompanying psychological change doesn't necessarily stay the same. The idea of trading 10 contract in the es may effect a trader simply because the contract size is 10 rather than 2 even if the account is 10xs bigger when trading the 10.

[daedalus]

^^ Very understandable. I'm sure it would effect me in that same way.

[Hlm]

I have been through a few, but here is the basics of my current structure which may change in the near future due to OPM.

Broker Accounts: Amount required to cover multiple time frames (positions maxed) plus my potential statistical draw down for two weeks.

Bank Account (specifically for trading): Revenue is moved over from my broker accounts every two weeks. If a loss occurs, the account is replenished and triggers a detailed personal audit to ensure that it has statistical merit. All trading expenses are paid from this account. Decisions to increase or decrease size is based off of this account.

Personal Account: As long as my trading bank account (not broker accounts) is in good standing and above required figures, I am paid every two weeks. Adjustments are made quarterly if needed.

As always, this most likley will be different due to ones strategy, goals, funds, personality, etc. The one thing that should not change is a well thought out plan/system with defined rules.