This is more of a money / portfolio management question. Assuming we risk 1-2% per trade, we’ll generally have most of our trading capital sitting idle in our broker’s account at any one time.
Instead of letting that money sit idle, what are some alternative avenues to park your money, both in order to reduce broker-side risk as well as increase your return? I’m thinking of depositing perhaps 20% of my trading capital to cover margin requirements and drawdown, and keeping 80% outside of my broker. Not only will this protect most of my capital from broker-side risk, it means most of my idle capital can be put to use.
I’m thinking of 30 to 90-day term deposits. Parking that money in something like securities or bonds is just another way of trading. Since I’m unfamiliar with trading those things, I want to stear clear.
Thoughts? Any other ideas? It seems foolish to hold most of your trading capital in cash, earning nothing, especially in someone else’s pocket i.e. your broker.