I began live trading about three months ago with a small live account (1500€) after having practiced a long time on a demo account. I am far away from having consistent profits but I am getting better with every day and learning a lot. The point of opening a small live account was to be able to see how I manage my trading with real money. (emotions, etc.)
My questions are about the capital one should invest and how to manage it.
First question: Let’s assume I will be profitable in the long run some day: should I keep building a small account or should I deposit more, for example 5.000 or 10.000 €? (assuming of course I have the money)
Second question: What is the best method to withdraw your profits? Should you build your account leaving everything in your trading account or should you take out a fixed percentage of profits every week/month or so? Or should you deposit let’s say 10.000 €, grow your account to 11.000, withdraw 1.000 and then do it again?
Would be great if you could give me some advice and express your opinion
First of all, full marks for your positive attitude, confidence, and enthusiasm! It is nice to hear someone talking about when they will be profitable rather than whether!
[quote=“Metalex, post:1, topic:152275”]
First question: Let’s assume I will be profitable in the long run some day: should I keep building a small account or should I deposit more, for example 5.000 or 10.000 €? (assuming of course I have the money) [/quote]
This really depends on your own ambitions. The only reason for adding more capital to your account is to enable you to trade larger positions, otherwise invest it elsewhere. Your account balance need not exceed the amount that is required to cover your typical margin requirements for your position sizes plus an ample amount to adequately cover possible drawdowns on your open positions, plus a suitable buffer on top in case of unexpected situations (to avoid forced closure of your positions due to inadequate funds.).
Your typical position size depends a lot on your intentions with your trading. If you are planning to become a full-time trader then you will require a lot of funds (maybe a 6-figure sum) to allow regular withdrawals and cover bad periods, illnesses, holidays, and so on. But if you are only interested in accumulating capital and withdrawing on occasions then your capital requirements only reflect your desired trading size that you are comfortable with at any given stage in your future.
The starting point here is the amount that you need in your account to allow the type and size of trading you are doing. Anything beyond that is withdrawable whenever you wish. This will depend of whether you are looking for a regular income or a supplement to another income or just to buy your yacht or the occasional Maserati (only kidding!). It is really up to you!
The only other factor is the cost of transferring funds. If you fund your account from a credit card then your broker will only repay to that same card and not exceeding the amount that you credited to your trading account from it. Additional funds are normally paid to a bank account and there will probably be fees and possibly exchange rate transactions involved. These may have an impact on optimising your costs via the frequency of withdrawing your profits.
But I guess one popular thought is to at least withdraw your original deposit once you have an adequate balance so that you are no longer trading your own money and your risk is (more or less) only your earlier profits.
