I only keep a portion of my funds with my broker. In fact, I only keep 10% maximum with my broker. I trade 1% risk and have a max of 3 trades at risk at any time. At 1:100 it works well but at 1:33 it can get tight so i do not like DK's weekend leverage policy.
As for your math below, it is incorrect because you did not change the 4% risk on broker funds. So you are comparing apples and oranges.
Initially 1% total capital equates to 4% capital at broker. $1000=$1000. But when you profit then the broker capital changes. You still want 1% overall but you kept the 4% from the previous equation as your broker number. Your 4% was calculated as (total/broker * desired risk) = (100/25 * 1%) = 4%.
You have to use the same equation so it is (112.5/37.5)*1% = 3%.
In your case you added 75+25+12.5 and got 125 when in fact it is 112.5. Also, you did not use a consistent formula.
As it is I just don't calculate based on funds at the broker. I just calculate globally 1%*total capital and then use that as the capital at risk.
As for your math below, it is incorrect because you did not change the 4% risk on broker funds. So you are comparing apples and oranges.
Initially 1% total capital equates to 4% capital at broker. $1000=$1000. But when you profit then the broker capital changes. You still want 1% overall but you kept the 4% from the previous equation as your broker number. Your 4% was calculated as (total/broker * desired risk) = (100/25 * 1%) = 4%.
You have to use the same equation so it is (112.5/37.5)*1% = 3%.
In your case you added 75+25+12.5 and got 125 when in fact it is 112.5. Also, you did not use a consistent formula.
As it is I just don't calculate based on funds at the broker. I just calculate globally 1%*total capital and then use that as the capital at risk.
DislikedDhb - While I see your general point (and I've been considering employing this scheme myself), I have a quibble on the math. If you have 100K, retain 75K in the bank, put 25K in a trading account, and want to risk 1% overall (ie max acceptable loss), you would indeed risk 1K on the first trade whether you calculated it at 1% of total funds or 4% of funds with your broker.
However, let's say just for the example that at the end of the month you'd made an unlikely 50% on the trading account with one trade. You now have a total of 75K in the bank,...Ignored