How do you pay yourself?

The way I've always done it is I keep X amount in my trading account as a capital cushion....I cut a check each month (usually after the employment number because the amount can change dramatically.) I just cut whatever I made and leave the cushion. If I don't need a check or want to keep more as a cushion I leave it. Some of my expenses now are debited each month from my account, so that makes it easier.

I know a lot of guys that keep 50k, when it gets to 150k they cut 100 back down to 50. Thats what works for their style and p&l.
 
I trade three uncorrelated systems, and I have a fixed percentage of my trading account allocated to each one. I rebalance these about once a month--this works pretty well given my usual one week to four month time frames for trades.

In addition, I aim to keep 18 months worth of living expenses in cash. Once a month when I rebalance, I also revisit the cash situation. If trading goes poorly in any given month, I let the cash balance go down as I withdraw from it for living expenses. If trading goes well, and the cash balance is under 18 months worth, I add the profit to the cash account until it tops off at 18 months. If trades go well and the cash balance already stands at 18 months, I leave the profit in the trading account and allocate it among the 3 systems according to my prespecified proportions.

With the cash, I don't feel that I have to be super careful with it with this method, so I do various things using closed-ends: short term bond funds, preferred stock funds, and a little bit of junk bond funds sometimes.
 
In my ForEx trading account, I have my broker send me a check for the profits after each trading day. That way, I always keep my "base" amount and am using the profits to pay the mortgage, etc...I've tried various methods but this is what works for me.
 
I cash out trading profits each month. In the event that trading profits are low I will sometimes withdraw equity with the intention of replacing it at a future date with trading profits. If I have a negative month I typically forgo a check. Trading can be a harsh business. You have to be able to live without a check for a month or two at times.
 
Old thread but interesting.

I'm wondering whether removing some equity on a regular basis can improve trading because trading with a larger account can lead to temptations to take greater risk and general disrespect of the equity

I find when I am back to my float level after withdrawing funds, I become extra careful not to take anything but the best setups so I don't fall into the negative. When I have a bloated trading balance I can get a little out of control.

Thoughts?
 
i have separate accounts. i transfer 40% of whatever i have earned into other and save until i can plan a trip. i love travelling and that's how i pay myself.:cool:
 
Weird seeing this old thread pop up again.

I pay myself a 100% performance fee for returns over the high watermark. This means I don't pay myself anything for months and months. So it's only viable if you have (a) a job, (b) several years of living expenses in cash or (c) other investments paying dividends [this is what I do].

GAT
 
Newc2 said:
I find when I am back to my float level after withdrawing funds, I become extra careful not to take anything but the best setups so I don't fall into the negative. When I have a bloated trading balance I can get a little out of control.

Thoughts?
More...

You already answer your own questions that's suitable for your trading habits. Further, if trading is a job to you or a business to you or you have a family to support...that too will answer your question.

wrbtrader
 
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