- What would be the best method to withdraw money from your forex account (or rather your margin)?
- What will happen to your margin and how much profit you make after two years?
I assumed that you make a constant percentage profit per month (which is not possible in reality) and also the starting margin is US$10,000.
To answer the first questions I tried different approaches such as withdraw half of the profit every month, or every 3 months, and so on. I eventually came of with an enhanced approach that says withdraw a quarter of your profit at the end of each month and then half of the remainder of the profit at the year end.
Let me give you an example. Suppose you make $1000 of profit every month. So based on this method your monthly withdrawal would be $250. At the end of the year you've made $12000 of profit but you've already withdrawn $3000 so the remainder of your profit would be $9000 (i.e. $12000-$3000). Now you are eligible to withdraw half of this which would be $4500. So your total profit is $12000. You withdraw a total of $7500 and you add $4500 to your margin.
Thus if you use the above protfolio management and if you start with $10000 and have a constant monthly profit. Your margin, profit, and average monthly profit will look like the following image for 5,10,15,20, and 50% growth per month.
http://www.geocities.com/cad_tips/po...management.jpg
Now lets get back to those two questions.
- I can't say which method is the best portfolio management but I found this approach very useful (much better than quarterly-half approach). I'll hopefully publish the results of my research in the near future to show how I came up with this idea. Note that, this approach is useful if you constantly make money and if you use it you are using it at your own discretion. I'm not responsible for whatever might happen to your portfolio.
- The tables show you that if you constantly have a 50% monthly growth after two years your $10,000 margin increases to over $9,300,000 and you have made an average profit of over $400,000 per month (a total of over $9,600,000). I don't know how realistic it could be but I prefer not to believe those who claim they make such profit constantly. This means that theoritcally you can become a mulit-billionaire in less than 5 years and just by trading Forex.
What are your thoughts?