whats the purpose of an account, anyway?
1 2

thread: whats the purpose of an account, anyway?

  1. #1

    whats the purpose of an account, anyway?

    Does your money sit idley in your account

    dormant

    no purpose

    what is the aim of the money from your 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 the total ACCOUNT should be available for drawdown. 100% drawdown. Otherwise, what is the purpose of keeping the money in the account? You have it there to cover losses, not to build some system that you may brag has low drawdown.

  2. #2
    Junior Member perita's Avatar
    7
    You're the one being humorous my friend.

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

    What he was saying is that whatever stay at the account has just a lone 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 entire 100k in case your startegy only risk roughly 2 - 5% per transaction (taking into account that you will just open a max of say, 3 positions, concurrently ).

    It's in fact dumb to maintain that 100k in it. Should you expect to lose you might too use it to down cover something or a house to yourself.

    As mentioned, you will not require the entire 100k, so you might want to approximately reduce half of it.

    For aggressive traders, we might want to trade more lots per position, hence larger drawdown% shrewd. Nevertheless, I am risking longer for longer with my 100k. When you risk a 10% drawdown to get a 10% increase and have over 50% demoned record you are doing pretty fine.

    It bore down to the taste and desire of the trader. (Of course noobs should always follow rigorous MM). If you are after these 2 - 3% drawdown risk MM even if you are well experienced, you are either

    1. bluffing
    2. You dun know your maths
    3. bluffing
    4. bluffing
    5. A very conservative trader (to whom you shouldn't be traduing fx)
    dude, can you read my other posts before getting all mad mad? I already said that I agree with his system, I have said it REPEATEDLY. And liek you said, its all about taste. It moves both ways. He likes to trade I trade that is agressively . And that doesnt.

    Ok, I think the biggest point im trying to make is that it depends on how you look at an account. I also trade other people's cash, although I trade my cash. I cant just go and blow all their cash on a few trades. So I use the 1 percent rule. I know my math although I am experienced, I am not bluffing, but I trade 1 percent. But the matter is, I dont have to be conservative with that rule. We could have 5 trades open, although How we work , we do 1 percent a transaction. Thats five percent in the event you dun know your maths baron. After those trades are closed, we could place in. We can do this an unlimited amount of times. We could have had 100 percent of the account open, but just not in precisely the same time. Additionally, this isnt a conservative. We put in a ton of trades somedays. We do it. But we use the 1 percent rule to restrict losses while still utilizing the margin of the account.

  3. #3
    Junior Member alexandrasanz's Avatar
    23
    really I didnt fail to read this thread, if you read the very first post, which was replying to, it says nothing about having any money off to the other 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 in line with you, all the major hedge funds and banks and companies who make millions of dollars A arent smart, right? They put all their trading funds into a single account but dont use the whole one hundred per cent to trade. what idiots. I cant believe that they are earning so much money when they're so clearly 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 somebody dropping the account then putting more cash into it), they are earning more than some of us will ever find in a life! Its mad! How could such idiotic people be so smart?

    The truth is, because they're smart too!!!!!! There are more ways than one. The only problem I had with what was saying earlier was that I though he was risking his trading capital all. Ive said this about three times. I have acknowleged the fact that his cash management sytem works.

    Oh by the way, I just love the way you classify yourself as a wise trader and therby suggest that I am not a wise trader when in fact you have no clue how I commerce. Its funny. You dont need to be clever in order to be succesful, and only because succesful doesnt mean you are smart. A wise man would realize this and keep his mouth closed.
    To get a trader, you seemed to be readily stroked to anger. It appears to me you believe I implied that your'e not really smart. Its astonishing human could conceptualise things according to what they see. The better they are the bigger the ego I guess.

    This does mean that im not so smart after all, right?

    Thus Mr Professional trader, heres a cup increased to you. Cheers.

  4. #4
    Junior Member OxteoeIcayr's Avatar
    2
    does your money sit idley in your account

    dormant

    no intention

    what's the purpose of the money in the account?

    Naturally, a part of it's to get margin....

    BUT

    the remainder should be 100% risk capital

    I find a lot of folks saying I need no more than 15% drawdown

    nicely, buddies, I say that the whole ACCOUNT should be readily available for drawdown. 100% drawdown. What is the purpose of keeping the money in the account? You have it to cover losses, to not create some system which you can brag has drawdown.
    Well my friend,
    hear this,
    a task provided here, they've told, they require no longer than 5% drawdown.

    You understand why,
    because usually once you have a large portfolio or handled account,
    you need to have to be prepared to pay the customer's funds if he ask to them, without damaging your whole account.

    And to accomplish this,
    there should be additional liquidity.

    But, if you are trading your own account,
    do what you would like.

  5. #5
    Junior Member jrttbu's Avatar
    1
    for a trader, you appeared to be easily stroked to anger. It appears to me you think I implied that your'e not so smart. Its amazing how human can conceptualise things according to what they see. The better they are the bigger the ego I guess.

    This does mean that im not so smart after all, right?

    So Mr Professional trader, heres a cup raised to you. Cheers.
    Cheers for absolutely no so smart folks like us too... LOL

  6. #6
    Junior Member gabiiis's Avatar
    2
    A little background, first. I'm a professional trader and manage the FX porftfolio. I was going through the forums once I came to this thread and it disturbed me a bit. So, here is my take...

    As a professional trader, I would have to recommend not ever trading over 1-2percent of your account. Yesyes... trading with such little risk sounds like the silliest thing you could potentially do with this much money left to sustain your drawdown. But, you if you can win 60%-70% of the time while only risking 1%, you'll have a trading model which will yield a good ROI at the year's end.

    Now, if you're looking to triple your account at 1 week, I recommend you trade with 100% risk... however, if you're doing this, you're flat out gaming, not utilizing ANY risk management, and you're also very likely to lose your cash in 1 week.

    Your equity or capital should never be completely used to sustain your drawdown... your capital should be employed to increase your account over time. If you lose 1 percent, you have a chance to trade another day... trading 100 percent could easily make you a lot of cash, but if one trade goes against you and doesn't return, you do not have an account period. And I guarantee you that there'll be more than 1 transaction that goes against you like this.

    If you trade, trade with the mindset: How can I PROTECT my cash? Maybe not... how do I double it? Should you protect your cash, and trade and THOUGHTFULLY with a good trading model that contains a risk management system, you WILL earn profits.

    Happy trading!

  7. #7
    Junior Member Oxhugo83's Avatar
    2
    JRowaboat I think you're overlooking the original posters point. He is not saying that you should risk your entire cash but that money that you are not risking (the other 99% if you're only risking 1%) should not be sitting in your brokarage account doing nothing but should maintain a bank/other investement earning interest. In the event you lose the 1 you can move more cash into your trading account and trade with it. This egy doesn't increase risk . Although it may be impractical for some of us smaller traders to move money often between accounts I am convinced traders like yourself do so all the time. (ie. Mutual funds hold cash reserves in money market funds or short term bonds, not in brokerage accounts not earning interest)

  8. #8
    Junior Member murguzur's Avatar
    2
    I think he got the point.
    I've heard Oanda pays 5 percent interest on balance which are the same thing we're speaking about this. Rather than holding bonds with 90 percent of your account and moving money you could exchange from the account that's making 5 percent each year. Wow. Some brokers call this float and your IB if he is savvy enough will have negotiations to profit from the float at your forex broker.

  9. #9
    Junior Member Oxhugo83's Avatar
    2
    Fxorce, I agree that should interest is paid by oanda then you might keep your money . Thats way greater than any bank or money market fund will cover in the U.S. Though I don't think this is exactly what JRowaboat was speaking about. If your broker is not paying any attention subsequently their is no point in keeping a massive account there and just risking 1-2%.

    BTW, do you happen to know how oanda is able to provide such a high rate. Its consistently surprising to observe a firm able to provide such a better deal compared to competitors (basically additional banks and MM accounts). It makes me wonder if it isn't how can, or if it is a short term thing that is promotional they provide such a high rate.

  10. #10
    Junior Member murguzur's Avatar
    2
    Go through this thread and you'll discover options.
    Australian savings rates are much higher than US rates.
    I'm guessing there are countries paying 10% for their bonds at the moment. Eastern European countries are having a difficult time with inflation and they're raising rates far.

  •