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Full Time Traders - How To Handle a $50K USD Account 8 replies

What would you do with a Billion Dollar Forex Account? 37 replies

What brokers would you want to use if you had 100k + million + account? 6 replies

Maximum amount you would keep with your broker? 34 replies

50k Account..2% Risk..Would you keep the full 50k in the account?

  • Post #1
  • Quote
  • First Post: Apr 30, 2009 5:28am Apr 30, 2009 5:28am
Hi Everyone,

I would be very interested to hear peoples views on this and get some examples of how Traders manage their full trading capital.

Ok, we know max risk of 2% per trade is sensible so we will stick to this.

2% of 50k = 1k maximum risk per trade.

So if day trading using reasonably tight stops There is plenty of spare margin and assuming that one is making steady/gradual progress There would actually be no need to have all this capital sitting in a Brokers Account. Right?

I think it is more sensible to deposit say 30 to 50% (15 to 25k) of your total trading capital. Keeping the rest in an account of your own rather than in your nasty Brokers.

Still Keeping 1k as max risk per trade because its 2% of your total capital not of whats actually sitting in your account.

Im pretty sure this must be how fx traders manage their accounts.

Any input or ideas/thoughts on this would be interesting.

What % of your total trading capital do you let your broker have ??


Trade well everyone and Blue Skies
I normally keep about 30% in. The rest is kept in Premium bonds and an instant access savings account. Any Premium bond winnings and savings interest is added to my total account, not that it amounts to much.

Tim
With a 50K account i would use lower risk/trade but that is just me.

At around 10K i was allready down to 1%.

If you have a high reward ratio strategy, you dont need to have 2% risk/trade.

If you make your risk calculation according to your whole account (in account and out of your account) that's fine but it just adds more calculation.

On the otherside, if you are not using your margin, it's allways better to have part of you money sleeping in a interest account.
Quoting melpheos
With a 50K account i would use lower risk/trade but that is just me.

At around 10K i was allready down to 1%.

If you have a high reward ratio strategy, you dont need to have 2% risk/trade.

If you make your risk calculation according to your whole account (in account and out of your account) that's fine but it just adds more calculation.

On the otherside, if you are not using your margin, it's allways better to have part of you money sleeping in a interest account.
Depends what 50K meens to you...

If you have Millions In the bank then you appitite to earn more Is likely bigger. More Risk = More reward. These kind of threads are hard to give advice on because the answer totaly depends on the OPs personal financial situation and risk apitite.
Living the adventure in my head.
There was discussion in another thread concerning the NFA proposed limitation upon leverage effecting the ability to maintain a smaller proportion of trading equity in a risky forex account. I hadn't really considered it but the gentleman certainly had a point. However in the long run, if the FX market does clean up its act and eventually does get fully regulated status in line with futures and equities then this is a small price to pay IMO. Yields from alternative investments have been pathetic recently, and I'd rather keep my money in cash or in my trading accounts. If the risk of holding money in these accounts reduces (although I pick my brokers carefully and some of them are guaranteed against fraud and failure) then it would not be such a concern.

If your native currency differs from the currency held in your account it might have some bearing. For one, it costs to transact money internationally (flat rate per transaction) and the exchange rates offered by banks aren't particularly attractive, so it may be worth doing it all in one lump. Seondly, if you're bearish on your home currency compared to the holding account currency, then it's all gravy. For instance, I funded a USD account back when Cable was over 2.00. I can't say it was entirely deliberate mind you, but I was happy to take the gains nevertheless. On the other hand, if you're bullish on your home currency, then there may be more of an incentive to keep a smaller proportion in the account, where it's value is likely to erode.
Quoting birdt
There was discussion in another thread concerning the NFA proposed limitation upon leverage effecting the ability to maintain a smaller proportion of trading equity in a risky forex account. I hadn't really considered it but the gentleman certainly had a point. However in the long run, if the FX market does clean up its act and eventually does get fully regulated status in line with futures and equities then this is a small price to pay IMO. Yields from alternative investments have been pathetic recently, and I'd rather keep my money in cash or...
Mmm Good food for thought that cheers
Just trade 5-10% of your balance per trade, that way your risk will be in that range, keep compounding and over course of 6-12 months you could be rich!
prepare for worst & expect the best
Quoting tony_dtrader
Just trade 5-10% of your balance per trade, that way your risk will be in that range, keep compounding and over course of 6-12 months you could be rich!
Too much risk for me my friend But as somebody said we are all different.
Just like to say i want ideas about amount or % of Trading capital kept in your Broker account rather than focusing on the risk management side.

Most of my trades are well below 2% and in certain circumstances maybe just over.

So, How much do you trust with your broker ??
Quoting riggster
Hi Everyone,

I would be very interested to hear peoples views on this and get some examples of how Traders manage their full trading capital.

I think it is more sensible to deposit say 30 to 50% (15 to 25k) of your total trading capital. Keeping the rest in an account of your own rather than in your nasty Brokers.

Still Keeping 1k as max risk per trade because its 2% of your total capital not of whats actually sitting in your account.

Im pretty sure this must be how fx traders manage their accounts.

If that is my total trading capital I would put 1/3 away in an account marked emergency trading, and another in an account marked 'long term'

Trade the one account as you have planned as short term trading.
That way you are secure in the knowledge you have emergency funds in case you do not get to consistency, and also you have another back-up plan without switching trading methods, just switching time-frame for trading. I am assuming you have less than 1 year experience.
It takes time to become a profitable trader. You have just bought 3 more time that if you have if all is in 1 account and at the same time you have a basic plan. You will also trade with less anxiety, but remember you have named one of the accounts emergency for a reason. Only to be accessed in emergency, which should mean not being complacent. You now have a balanced attitude, yin and yang. Get the attitutude right at the beginning and you reach the altitude you long for.
Of course 1/3 is just a fraction and you could use any reasonable fraction you want, but the idea is there.
Happy trading.
50K account, 2% risk, i will make 25 trades per day.
I personally Don't keep more in my trading account than I would feel is the most I should lose before I need to step back and rethink my strategy.. This is normally 4 loses in a row. Then the time it takes to refund gives you time to calm down and see what has happened. Trading to gain your loses back, never works. Plus most broker aren't insured so keeping a lot of money in there hands, not sure that is a good idea either.

Depending on your leverage you can get.. I use all my brokers leverage , that way I don't have to have a lot of capital in the account for each trade. Most people use leverage wrong they are trying to get rich without enough equity to start with. But the proper way is to protect your trading account using leverage to have less at stake. In your account. I also continue to read of people scalng back there % risked as there account and skills grow. This I have never understood, Yes we should keep our emtions in check and not over risk. But when we start making money consistentlly we are also gaining the skills to do this professionally.

Seems like we would want to risk less learning then scle up as we realize the precentage of wins our strategy provides within sensible limits of course.

So depending on your Strategy you use figure out how much you are willing to lose before you think something isn't right and keep that in your account. I would more than likelly keep $5000. in my trading account if $50,000.00 is my trading stake.

Trade Well Ken Lee
Good Trading To All ; Ken Lee
I would not - for the simple reason that if the broker went pop there would be no guarantees (as far as I know). I am not sure of the situation in the US or elsewhere but in the UK (my understanding is) if you had that amount of money in a bank account the government guarantees that value - if your bank went down you wouldn't loose your money.
Quoting DanUK
I would not - for the simple reason that if the broker went pop there would be no guarantees (as far as I know). I am not sure of the situation in the US or elsewhere but in the UK (my understanding is) if you had that amount of money in a bank account the government guarantees that value - if your bank went down you wouldn't loose your money.
I agree with DanUK, there are no guarantees with forex "brokers" - so you are best off keeping only as much in the account as you need to trade, and then either bank the rest or do what flytim does... that's how I see it.

Basically, most traders will need to decide how much they should keep in the account based on at least the following factors:


1. The leverage available to the account.

Obviously, with more leverage you can keep a smaller balance.


2. The amount risked per trade.

A higher risk will mean you will need to leave more in the account.


3. Your win rate.

If your win rate is lower then you need to consider how many consecutive losing trades are likely. Run Monte Carlo studies, or I can send you a nifty spreadsheet to calculate this, just PM me. Obviously, a lower win rate means you need to put a higher % of your trading money in the account.


4. How comfortable are you with your "broker?"

Your money is not secured, you may lose it. This has happened before and may happen again. You can learn more about your "broker" at:

http://www.nfa.futures.org/basicnet/


5. Do you need to pull out your winnings regularly?

If you are continually pulling out your returns, you may want to try and keep as little in the account as possible and simply "withdraw" from your trading money from a bank. After a while you will need to withdraw from your trading account, but by reducing the need for withdrawals from your actual trading account you cut down on wire/transaction fees.
I'd keep as much as possible away from the brokers.

Here in the Uk, it used to several days to move your money out of an account and almost instanteous to put in.

So as a guideline, what is the most you can lose in a week? What is your risk?If you're a scalper, you may take dozens of trades per day/week.

As an example, If your risk is 1%-2% and you're only making say 5-10 trades a week - AND THEY ALL GO WRONG - then it would be a good idea to keep 5-10 x (1%-2%) in your trading account. So on my example above , anything from 5% to 20% of your total amount.

Then move any profits outwards, and any top up ££money inwards

regards
Just for today, do not worry...
  • Post #16
  • Quote
  • Last Post: May 21, 2009 2:07pm May 21, 2009 2:07pm
Quoting riggster
Hi Everyone,


So if day trading using reasonably tight stops There is plenty of spare margin and assuming that one is making steady/gradual progress There would actually be no need to have all this capital sitting in a Brokers Account. Right?

I think it is more sensible to deposit say 30 to 50% (15 to 25k) of your total trading capital. Keeping the rest in an account of your own rather than in your nasty Brokers.

Still Keeping 1k as max risk per trade because its 2% of your total capital not of whats actually sitting in your...
Sounds to me that there are some big personal issues to consider and overcome before even starting to trade. I don't mean to sound combative, but if you think of your broker as 'nasty', you've already figured out that when you lose you have someone to blame - other than the person pulling the trigger.

This line of reasoning is very self defeating.
I'm pretty much done with all this ...
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