What's wrong with compounding returns?

[galiano]

I sweep my primary futures account every 2 weeks. The reasons in order...

1) living expense

2) segregated tax planning

3) segregated savings and retirement vehicles (low risk investments)

4) funding of other accounts with different clearing firms, used for different trade styles, backup access to markets, other special or possibly duplicative purpose. Choice of clearing firm is key to this strategy.

5) Just in case another corporate debacle/fiasco happens. Although frozen or lost assets would/should be reasonable in reference to total trading assets, IF #4 is implemented properly.

Cheers

 

[achilles28]

Quote from dis:

If you take this approach, you will not have much to extract from your account, so you might as well let it compound.

debatable. I think traders compounding 10% a month do pretty well.

Either way, your comment is true for most trading strategies. However, it doesn't hold for strategies employing tight stops with fixed risk.

 

[achilles28]

Quote from robertstone:

It's good to take money out because this is your job! Pay yourself a salary and enjoy the benefits of what you've worked so diligently for.

--RS

Good point.

 

[achilles28]

Quote from galiano:

I sweep my primary futures account every 2 weeks. The reasons in order...

Choice of clearing firm is key to this strategy.

Thanks for contributing. Diversifying broker/clearing firm risk seems central to the argument against the all-eggs-in-one-basket approach.

Makes good sense.

 

[ElectricSavant]

Why can't you simply spreadsheet a scheme to let half your profits go to the balance, while you pull the other half monthly...This way you get to BE and get paid for your time...Use your balance to calculate your trade size.

If you do not have a place to put your monthly paycheck, diversify it to another account..Get into this habit, and use your equity curve to help you decide on your diversification and weighting...

The prop trader point is understood...

Michael B.

 

[achilles28]

I prefer to let it grow and wait until its a nice size before i start milking it. Just my preference.

 

[ElectricSavant]

Fair enough...each system you trade has its own level...You wouldn't want to trade just one system or methodology...

Quote from achilles28:

I prefer to let it grow and wait until its a nice size before i start milking it. Just my preference.

 

[achilles28]

Level?

 

[ElectricSavant]

Compounding...I use a tier structure. Sorry you may have a different compounding method.

Michael B.

Quote from achilles28:

Level?

 

[achilles28]

So you suggest running more than one compounding algorithm simultaneously for one strategy?

Or trade at least two altogether distinct strategies at the same time?