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Defensive Cash Account

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trade, but if you approach the trading day with the thought that you will be adding to the $6.25 risk free accrual, you will have the appropriate risk appetite for day trading. Remember, the cash in your account is what you will be using as a draw for your salary. In other words, your paycheck from the trading account will be in dollars, and you will be paying your bills associated with the operating of your day trading business in dollars; this is the balance that you should be looking to keep high. You wouldn't want to load up your account in things other than dollars (stocks, FX, futures, etc.) for too long of a time because you eventually have to convert these into dollars to spend on the expenses of the account. Trading as a Source …show more content…

If you allow yourself to get to the point where you run out of money you will be forced to close shop and take a job: proper cash account management can prevent this from happening. The Defensive and Offensive Cash Account You should be thinking of your cash account in two terms: defensively and offen- sively. The defensive cash account is the mindset that your cash account is the source of your paycheck and the source of a day trading business's self sufficiency. You should get to the point that your day trading business is completely self-sufficient and in no way harms your total picture of economic well being. While you might be taking a lower paycheck as a draw from your account in the beginning while you build up your account, you should be thinking of your trading account as a cash account that has a balance big enough to get you to the next trading day. That is your ultimate goal: to get to the next trading day. A defensive mindset will pay the bills associated with trading out of the account with as small an amount of withdrawals as possible. This means that not only will you be

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