Joe,
Awesome work putting the lessons into practice! 5%/6 rule in full force. And a plan while your on your way there. Good job.
Darrell
So, a few notes to consider…
Definitely make sure you got that 5%/6 rule built in… (ie what is your max risk per trade cell) - you enter it.
Okay, first goal is to get you to this amount before we increase position size (ie if say max risk is $50 - then $50 x 6 x 20 is account size goal) before any size increase happens.
Second thing, what is the initial deposit into account…?
First goal in this phase is to withdraw your initial deposit. Assuming you started with less than 25k. For instance, if starting with 1k, then goal is to withdrawal 1k etc… If the starting amount is greater than 25k, then first goal is to withdrawal the first 25k. So, phase two, goal 1, withdraw initial deposit. Put that money into a savings account. It’s your dry powder, so if, when, you mess up and let yourself get the best of you your not knocked out of trading.
Goal 2 - every time you double your account take out half. Part of that goes to dry powder account, then 10% - part to a charity of your choice, 10% - part of it to savings for unplanned expenses, 10% - part of it to retirement savings, 10% - part of it towards debt, house, and car loans, 10% - part of it towards taxes (Ugh, talk to your CPA about the best short and long term tax planning for you). The rest you live on (as debts, house, and cars are paid off, that’s more you have to live on).
As unplanned expenses exceeds 6 months of living expenses, then you can now have that for expenses. Just remember never let that go below 6 months of unplanned expenses in savings. So, if your bills go up, then so does that account along with it. Which means if you increase your expenses you need to simultaneous be increasing that account.
Doing this lets you trade with a clear mind, as you’re no longer trying to trade with the rent money. Once your retirement grows, this is a diversified, not a pure cash account.
From here you go into bonds (municipal, and other types), real estate (cash flow not flipping), metals (gold/silver standard US coins - small sizes), and cash in various currencies.
Factor it into the sheet for the Apex Steward and Money Management Plan.
Also note, once your account gets to x size there is no longer a reason for it to get larger. You only need enough in your account for about 2 weeks of max draw downs etc… Don’t grow your account at your broker, fcm or where ever. Grow it at your bank, your vault, or with your assets.
