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what's the purpose of an account, anyway?

  • #21
  • Jun 22, 2008 10:46pm Jun 22, 2008 10:46pm
Here in Australia, it's actually 8.7% now I see

I have two bank accounts, one with NAB (pays 7.1%) and the other with Suncorp (pays 8.7%).

Forgot to mention, doing it this way, I've solved my "over-trading" problem. I don't want to pay broker fees to top-up my account, so I'm quite selective of the trades I take.
  • #22
  • Jun 23, 2008 2:06am Jun 23, 2008 2:06am
here in India..its close to 9% interest rate....but still its all paper money cheat...with 11.05% inflation and rising...if u deposit 10,000 in bank...with adjusted inflation month over month u end up with 9500 or something at the end of your deposit term..i think all over the world its the same thing.

Time is money...We need to make more money in a month than wait for interest to accumulate
  • #23
  • Jun 23, 2008 6:43pm Jun 23, 2008 6:43pm
Quoting tdion
does your money sit idley in your account

dormant

no purpose

what is the purpose of the money in the account?

naturally, part of it is for margin....

BUT

the rest should be 100% risk capital

i see a lot of people saying "I want no more than 15% drawdown"

well, friends, i say that the ENTIRE ACCOUNT should be available for drawdown. 100% drawdown. otherwise, what is the point of keeping the money in the account? you have it there to cover losses, not to build some system that you can brag has low drawdown.



HAHAHAHAHAHAHAHAAH!!!!!!!!!!!!!!!!!! the whole point of an account IS for margin. lol. if you really believe that whole 100% crap, you are most likely gonna be homeless in a few weeks. what happens if you lose one trade while risking that whole 100? what do you do then?

and as for the whole thing about the system with low drawdown, the less drawdown your system has, the more profit youre most likely gonna get. if you have 100 percent drawdown, youre most likely going to get a margin call and youre gonna lose your trade. it might go your way eventually and turn out to be a big winner, but that wont matter at that point.
  • #24
  • Jun 23, 2008 7:38pm Jun 23, 2008 7:38pm
The entire point of risking a tiny percentage of your account is that you can withstand a losing period whereas you or your system become (for whatever reason) slightly out of sync with the markets. Also, so you can sleep at night and also so that fear of loss doesn't play in to your decision-making. TRading correctly firstly requires the proper frame of mind and if you are able to make your decisions without worrying about blowing out your account, you are more apt to fo the right thing....as long as you are an experienced trader with a sound methodology. Over the years, for me at least, this sort of thinking has been the turning point.
There's always money in the banana stand.
  • #25
  • Jun 23, 2008 7:43pm Jun 23, 2008 7:43pm
i never said i'd risk my whole account on one trade (the 2nd time i've said this in this thread)

dude, do whatever you want.... it just doesn't make sense to risk 1 and 2 percent per trade..... you are being unproductive with the majority of the account.

Quoting blacksun1
HAHAHAHAHAHAHAHAAH!!!!!!!!!!!!!!!!!! the whole point of an account IS for margin. lol. if you really believe that whole 100% crap, you are most likely gonna be homeless in a few weeks. what happens if you lose one trade while risking that whole 100? what do you do then?

and as for the whole thing about the system with low drawdown, the less drawdown your system has, the more profit youre most likely gonna get. if you have 100 percent drawdown, youre most likely going to get a margin call and youre gonna lose your trade. it might go your way eventually and turn out to be a big winner, but that wont matter at that point.
  • #26
  • Jun 23, 2008 7:48pm Jun 23, 2008 7:48pm
just because you risk one percent doesnt mean you only make 1 percent. risking one percent means you can only lose one percent, but it also means you can make an infinite percentage if you win. i might risk one percent, but if my trade is a good setup, i can gain 20 to 30 percent. i am a long term trader. there have been times when i have only risked 3 percent, but on that same trade i have made 50 percent. that doesnt sound unproductive to me.

and by the way i didnt mean you had one trade at 100 percent. you can have two trades at 50, three at 30, 4 at 25, etc. but the principle is still the same. lose once and youre done.
  • #27
  • Jun 23, 2008 8:22pm Jun 23, 2008 8:22pm
TD is a radical thinker. If you go back in his posts he has some great concepts that go directly against conventional wisdom.
The concept being discussed here is an excellent one. I agree if there is a system being traded at your broker that makes 12% per year with a couple % drawdown then put the majority of your account in that system and manage the remainder of your account at a higher leverage identical to your net risk capital. Understandably if you have a 50% drawdown on your actively managed account it seems like you are over leveraging but in reality you may have only lost 10% of your risk capital.
How much of your account should be placed in an external system?
I think we would setup the actively managed account with the typical max drawdown sustained by the actively managed system.
It really is that easy.
  • #28
  • Jun 23, 2008 8:31pm Jun 23, 2008 8:31pm
according to wiki answers, the opposite of WISDOM is RETARD.

http://wiki.answers.com/Q/What_is_th...nym_for_wisdom

lol im half kidding here but seriously, usually, wisdom is gained through years of experience. if you gamble against experience, you lose. just being radical doesnt mean anything. you have to be radical and smart.

now, if you said conventional THINKING instead of wisdom, i would say that it is probably better to go against conventional thinking, because 90 percent of traders out there are wrong. but to go against wisdom is just foolish.
  • #29
  • Jun 23, 2008 9:21pm Jun 23, 2008 9:21pm
bah. i'm not impressed with this guy.

Quoting blacksun1
according to wiki answers, the opposite of WISDOM is RETARD.

http://wiki.answers.com/Q/What_is_th...nym_for_wisdom

lol im half kidding here but seriously, usually, wisdom is gained through years of experience. if you gamble against experience, you lose. just being radical doesnt mean anything. you have to be radical and smart.

now, if you said conventional THINKING instead of wisdom, i would say that it is probably better to go against conventional thinking, because 90 percent of traders out there are wrong. but to go against wisdom is just foolish.
  • #30
  • Jun 23, 2008 9:28pm Jun 23, 2008 9:28pm
lol im not trying to impress you, im trying to make sure that people dont lose all their money and gamble it all way because they listended to your whole 100 percent drawdown idea.

plus, i wasnt saying anything bad about you, like you said, you can do whatever you want. i was criticising the guy above me for his choice of words. honestly, i think the hundred percent thing can definitley work, but not for the people on this site. so i dont think its an altogether crappy idea, but it is definitely not a good one for normal, part time retail traders.
  • #31
  • Jun 23, 2008 9:30pm Jun 23, 2008 9:30pm
fair enough. getting into RETARD definitions isn't my thing. let's just say, there are very few things traders can do to remotely stack the odds in their favor.... or at least minimize the uphill battle....

so take it for what its worth. late.

Quoting blacksun1
lol im not trying to impress you, im trying to make sure that people dont lose all their money and gamble it all way because they listended to your whole 100 percent drawdown idea.

plus, i wasnt saying anything bad about you, like you said, you can do whatever you want. i was criticising the guy above me for his choice of words. honestly, i think the hundred percent thing can definitley work, but not for the people on this site. so i dont think its an altogether crappy idea, but it is definitely not a good one for normal, part time retail traders.
  • #32
  • Jun 23, 2008 9:36pm Jun 23, 2008 9:36pm
roger that. btw i really wasnt calling you a retard, if you took it that way i am honestly sorry. it was more for the joke aspect than anything else. i do respect your ideas, and from what i have seen you do appear to be a capable trader. so again, if you thought i was just being rude or whatever, i apologize.
  • #33
  • Jun 23, 2008 9:55pm Jun 23, 2008 9:55pm
TD is a solid member of FF and from what I can understand he's wicked smart too. He's turned some of the old pros on FF upside down and proved his concepts with forward tested statements.
I'm waiting for more ideas like NuckingFuts in AU holding a CD at 8% with the majority of his capital.
I must be sleep deprived because this is not a new concept for brokers. If you hold bonds and are gaining interest you can use those bonds to fund your margin account at your broker. In the centralized market world of commodities, stocks and futures this is common place. You don't get full value of your bonds, but it's better than earning 0% interest while the broker makes the float. An institutional FX broker who offers futures should be able to accomodate a haircut.
http://www.investopedia.com/terms/h/haircut.asp
It really is that easy.
  • #34
  • Jun 23, 2008 10:02pm Jun 23, 2008 10:02pm
Quoting blacksun1
just because you risk one percent doesnt mean you only make 1 percent. risking one percent means you can only lose one percent, but it also means you can make an infinite percentage if you win. i might risk one percent, but if my trade is a good setup, i can gain 20 to 30 percent. i am a long term trader. there have been times when i have only risked 3 percent, but on that same trade i have made 50 percent. that doesnt sound unproductive to me.

and by the way i didnt mean you had one trade at 100 percent. you can have two trades at 50, three at 30, 4 at 25, etc. but the principle is still the same. lose once and youre done.
I risk 50% all the time, I'm not homeless (yet... heh).

Like I said, 50% of my broker equity is 0.1% of my trading capital. So I can afford to have 1,000 losses before milking it all.

Point I'm making is that not all people have all of their eggs in one basket...
  • #35
  • Jun 23, 2008 10:11pm Jun 23, 2008 10:11pm
Quoting blacksun1
according to wiki answers, the opposite of WISDOM is RETARD.

http://wiki.answers.com/Q/What_is_th...nym_for_wisdom

lol im half kidding here but seriously, usually, wisdom is gained through years of experience. if you gamble against experience, you lose. just being radical doesnt mean anything. you have to be radical and smart.

now, if you said conventional THINKING instead of wisdom, i would say that it is probably better to go against conventional thinking, because 90 percent of traders out there are wrong. but to go against wisdom is just foolish.
Dude, for all you know, tdion has a similar set-up to mine. 100% of his broker account may be a piece of fly shit in comparison to his total trading capital reserve.

I agree with what you're saying in principal, but there's more than one way to skin a cat.
  • #36
  • Jun 23, 2008 10:12pm Jun 23, 2008 10:12pm
aaaaaah see, that makes a ton of sense. i totally understand that idea, because it works. although, i would argue why not just put all of the money in one account and trade at .1%. it would have the same effect. but anyways, i think that is a perfectly good risk management strategy. i was assuming when you guys talked about 50% or 100% of your account that all of your money was in that account. my fault.
  • #37
  • Jun 23, 2008 10:22pm Jun 23, 2008 10:22pm
Quoting blacksun1
aaaaaah see, that makes a ton of sense. i totally understand that idea, because it works. although, i would argue why not just put all of the money in one account and trade at .1%. it would have the same effect. but anyways, i think that is a perfectly good risk management strategy. i was assuming when you guys talked about 50% or 100% of your account that all of your money was in that account. my fault.
It sure does work, for me anyway. It solved my biggest problem with "over trading". I've narrowed the losses down to a bare minimum and my equity is still working for me when it's just sitting there doing nothing.

And spider, inflation is not a biggy here in Aus at around 4%.
  • #38
  • Jun 23, 2008 10:28pm Jun 23, 2008 10:28pm
Quoting blacksun1
aaaaaah see, that makes a ton of sense. i totally understand that idea, because it works. although, i would argue why not just put all of the money in one account and trade at .1%. it would have the same effect. but anyways, i think that is a perfectly good risk management strategy. i was assuming when you guys talked about 50% or 100% of your account that all of your money was in that account. my fault.
maybe you failed to read this thread from the start.

A smart trader will not put all their money in one basket.
We use the margin provided to FULL effect, this is determined by your own personal risk management.

The rest, it would be wiser to place them in an interest bearing account.

Personally, i put enough to sustain margin maintenance. It keeps my risk profiling moderate this way and it rebuffs risky trading attitudes.
  • #39
  • Jun 23, 2008 11:00pm Jun 23, 2008 11:00pm
Quoting blacksun1
HAHAHAHAHAHAHAHAAH!!!!!!!!!!!!!!!!!! the whole point of an account IS for margin. lol. if you really believe that whole 100% crap, you are most likely gonna be homeless in a few weeks. what happens if you lose one trade while risking that whole 100? what do you do then?

and as for the whole thing about the system with low drawdown, the less drawdown your system has, the more profit youre most likely gonna get. if you have 100 percent drawdown, youre most likely going to get a margin call and youre gonna lose your trade. it might go your way eventually and turn out to be a big winner, but that wont matter at that point.
You are the one being funny my friend.

Tdion is not talking bout blowing up the 100% of the account.

What he was saying is that whatever remain in the account has only a sole purpose - as margin. Henceforth, whatever is not more likely to be utilised should be directed elsewhere.

Example:

You have an 100k in your account. There's no point to keep the whole 100k if your startegy only risk about 2 - 5% per trade (taking into consideration that you will only open a maximum of say, 3 positions, simultaneously).

It is in fact stupid to keep that 100k in it. If you expect to lose that much you might as well use it to down pay yourself a house or something.

As mentioned, you won't need the whole 100k, so you might want to roughly reduce half of it.

For aggressive traders, we might want to trade more lots per position, hence larger drawdown % wise. That said, I'm risking more for more with my 100k. When you risk a 10% drawdown for a 10% growth and have more than 50% proven record you are doing pretty fine.

It all bore down to the preference and appetite of the trader. (Of course noobs should always follow strict MM). If you are following these 2 - 3 % drawdown risk MM even when you are well experienced, you are either

1. bluffing
2. you dun know your maths
3. bluffing
4. bluffing
5. a really conservative trader (to whom you shouldn't be traduing fx)
  • #40
  • Jun 23, 2008 11:05pm Jun 23, 2008 11:05pm
Quoting jest1081
maybe you failed to read this thread from the start.

A smart trader will not put all their money in one basket.
We use the margin provided to FULL effect, this is determined by your own personal risk management.

The rest, it would be wiser to place them in an interest bearing account.

Personally, i put enough to sustain margin maintenance. It keeps my risk profiling moderate this way and it rebuffs risky trading attitudes.

actually i didnt fail to read the thread, if you read the FIRST post, which i was replying to, it says nothing about having any money off to the side. I work for a professional trading firm. we keep all the money in one account. this is how it is done all over the world. and according to you, all the major hedge funds and banks and firms who make millions of dollars A DAY arent smart, right? they put all their trading capital into one account but dont use the full one hundred percent to trade. what idiots. i cant believe that they are making so much money when they are so obviously not smart traders (according to you). i just cant get over the fact that while you are losing your account repeadtly (im only basing this on the fact that there is mention of someone losing the account then putting more money into it), they are making more than any of us will ever see in a lifetime! its insane! how could such dumb people be so smart?

the truth is, because they are smart too!!!!!! there are more ways than one to manage your money. the only problem i had with what tdion was saying earlier was that i though he was risking all of his trading capital. ive said this about three times. i have also acknowleged the fact that his money management sytem works.

oh by the way, i just love the way you classify yourself as a "smart" trader and therby imply that i am not a "smart" trader when in fact you have no clue how i trade. its quite funny. also, you dont have to be "smart" in order to be succesful, and just because youre succesful doesnt mean you are "smart." a "smart" person would realize this and keep his mouth shut.
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