Withdraw every month or leave it to grow?

gaussian said:
There are tax implications involved in taking cash out and they can hurt quite a bit. The tax man is not nice to traders.

Keep it in there, sell losses at the end of the year, use that cash to fund whatever you want.
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I don't pretend to understand US tax law but surely the taxman doesn't care whether your cash is in or out of a particular account? I can see why an investor wouldn't want to withdraw mark to market profits as this would mean selling early and realising a capital gain, but I don't see why a trader would get taxed for withdrawing profits already realised as cash?

GAT
 
globalarbtrader said:
I don't pretend to understand US tax law but surely the taxman doesn't care whether your cash is in or out of a particular account? I can see why an investor wouldn't want to withdraw mark to market profits as this would mean selling early and realising a capital gain, but I don't see why a trader would get taxed for withdrawing profits already realised as cash?

GAT
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I must've misunderstood OP. If it's in cash the taxman already knows. I was answering whether or not to sell to realize profit.
 
Exponential growth can only occur if u let it grow. If u need money get a job and let ur trading account grow... After 10 yrs, quit ur job and live on a monthly allowance from ur trading
 
metatrader54 said:
What do you guys do/recommend?

Short term happiness or long term benefits?
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Money in a trading account is money at risk.

As far as I'm concerned, I haven't made any money unless I withdraw it.

The idea of leaving money to compound on future trades has a big underlying assumption that you are long term consistently profitable. I doubt many could be sure of that.

(Long term investment in hard assets is a different question. My answer relates to trading)
 
globalarbtrader said:
...but I don't see why a trader would get taxed for withdrawing profits already realised as cash?

GAT
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It would really apply only if the trading account was an IRA. If it is a cash trading account, your gains and losses are realized when you, um, close the positions (heh), or mark to market at end of year.

IRAs are different though. Bad juju for early withdraw and all that. (And then there is the traditional and ROTH IRA types. Different tax laws apply to each. Makes the head spin.)
 
metatrader54 said:
What do you guys do/recommend?

Short term happiness or long term benefits?
More...
What is the goal of your trading/investment? Is that a short term goal, or long term goal? That would, for me, determine whether I would take out money regularly, or keep it at work in the account.
 
i've steadily diversified more into superyatchs/grousemoors/estates in countries with good rule of law. i've become more risk averse with age
 
Well that depends on what type of a trader/investor you are. Goals can be different for every person and so accordingly, will he make withdrawals.
 
I'd always recommend leaving the money in the account so your account, position sizes and annual returns grow accordingly.

BUT - UK accounts are only protected against failure of the brokerage house up to a certain amount - £85k I believe. So anything in the account in excess of that limit is "uninsured". Some other jurisdictions / accounts have similar protection and it pays to know what level your own protection reaches to.
 
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