Originally posted by Zestfulmocha
Rick, Ghost,
What are both of your views on scaling e.g. by what % do you increase your equity each year - do you withdraw 100% profits to live on and keep equity the same, or do you withdraw say 50% profits and let the rest compound?
Something you said Rick the other week made me wonder - I think you said you would trade 0.1 and work up to a max 1 lot on a position, or was that referring to the LT trades? If it were me in your position (acknowledging I am not a conservative) I would be re-investing the majority equity into snowballing those lot sizes if I had the experience and confidence to execute, so trading with lot sizes of ... 5? 10? wouldn't bother me so long the %s and trades were consistent - is that an overly simplistic view or is there other considerations in Fx market when scaling that are not obvious to me.
My view comes from how I think about my ASX trading, of which I re-invest 100% profit - so whether I'm swinging $100 pips or $5k pips on a stock doesn't really bother me so long as the plan is still there (and obviously, the liquidity, which appears to be a non-issue in Forex). Since 1 Jul 17 using that approach I am sitting on roughly 470% returns from my starting capital, so it is working well for me to not constrain myself to set equity sizes, and whilst the draw downs are bigger - so long as the % remains within my tolerance it's all smooth sailing as far as i'm aware. For a yearly reference, I closed 250% last FY (based on close price, not purchase price, I was actually down 30% from my high on the back of the market correction earlier that year). So far 61.5% returns this year.
Hey Zest, sounds like you're doing great!
For me, I tend to withdraw 50% every month. I make enough from FX to live on but, in saying that, it's not my only source of income so I don't really stress over how much to withdraw - sometimes I don't withdraw anything. Over the years I owned and sold a few businesses and now own one that's somewhat automated + have other investments such as property, so that's where the bulk of my equity has come from. FX more just pays for vacations and things like the $5,000 mountain bike that I've only used once.
If I were to do it full-time as I'm sure I will one day, I'd simply put more money in the account and increase the position size respectively, taking out 70-100% of profits each month.
I used to manage money for a handful of wealthy family and friends and we used to compound the account, only withdrawing every 10-12 months. We were making some great returns and, by not withdrawing anything for a year, we saw the account grow very quickly. We made over 125% in under two years. We averaged around 6% per month with some huge winning months and some small losing months.
As for your questions/comments concerning EA's, I'm really not the guy to ask. Rick and Sharks would be more help than me.
