Take out profits or build account

Just thought I would see what the full time traders are doing here. Do you sweep out profits at the end of each month or let your accounts keep compounding.

If you do take profits (besides living on it) do you invest else where to continue growing your money?

Chris

The answer to this has to be driven by personal goals or targets. There are (at least) two reasons for sweeping out profits:- 1) you need them 2) you are working towards zero-capital risk.

I am in the 'leave it to grow' camp, simply because I want a fund big enough to use as an income stream later. Another reason for growing your fund is that it either reduces your effective leverage, or it allows you to trade larger positions.

I am not doing this full-time yet, but I am scooting back to my other machine now that the markets are opening

I take funds out every quarter and put them in cash for a guaranteed return. I might put these funds into the stock market in the future

I draw 23.6% of my total balance every month..make money and use the money then make even more and use even more money...

I am blessed with a good job, so I dont need the money, so I keep it in there for a rainy day.

The way that makes the most sense to me is to take out 50% of your profit every quarter and put it into cash.

That way if you start with $1000 and you make 100% in the quarter giving you $2000, I would withdraw $500 (1/2 the profit) and put it away in a high interest savings account. That way you are investing some money safely but also increasing your stake.

You could also do this if you have a windfall win that you were not expecting. Recently I was long the FTSE at small size going into the first unexpected rate cut. When I got back to my desk after lunch I was up over $2,000. I also once caught a lagging quote on the FTSE that made me over $700 almost instantly. These are circumstances (the events that happened not the amount I made) that do not happen very often and they are a nice opportunity to withdraw some of your winnings.

The Short answer if you do not "need" the profits then build your account. Otherwise come up with a method of cashing in your profits that you are comfortable with.


Let me set up a scenario (i am bored)...

Leave all of your "nest egg" in your trading account...
You open a long position with a stop loss set, drastic world event happens (or unexpected news) and all of a sudden price jumps 200 pips or more, right over your stop loss (extreme market conditions, sorry) your platform crashes so you can not exit. Your entire nest egg (or a large portion of it now is gone). Your broker says sorry there is risk in trading during extreme market conditons and the market jumped over your stop loss.

A possible solution :

Keep your main capital separate from your immediate trading capital so that it is safe from an open position that could drain your account when your stops are jumped during "extreme volatility". Your main capital should also be in an interest bearing account of some sort, doing a little extra work for you at no risk.

You could implement this strategy by having a weekly (or some other time period) trading allowance, that you would transfer into a trading account to use for that time period. What amount would be decided by your Money Mangement system and the total risk you are willing to expose yourself to. Then when your time period has ended you extract your profits (hopefully) or add more capital to bring your balance to your new trading risk level.


Almost any variation of this plan will help the trader stick to Money Mangement rules as well as protect your Trading capital.

EllisEdi, I think that is a very good point.