Sunday, May 10th, 2015

Active Traders: What percent of account should I keep in cash?

This would be for commercial positions anywhere from several days to six months. Uncovered option writing does not count here, or any other strategy that links to large amounts of capital (but not short selling, however, since it is tied only allocated). I guess my question is how should I keep as buying / purchasing power? I probably work of two long and two short positions at the same time, if you’re diferencia.Los dealers, please. Thanks for your help! Although for options I would definitely have more than four digits, possibly around ten. What is your advice for holding cash? Thanks Thanks for your response. I appreciate your help. However, my question is more towards how much more should be “maximum investment.” For example if I’m on my peak in total confidence trades for my maximum size of my designated account, how much money should I keep in reserve? My first diagnosis would be a means of trade, so if I’m working four jobs that must be kept in cash 1/8th if you encounter a golden opportunity. What do you think?

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One Response to “Active Traders: What percent of account should I keep in cash?”
  1. A nobody says:

    Every traders has their own guidelines but they are all about the same, the percentage you keep in cash depends on your total investing capital commitment. Never invest 100% of their capital nor invest 100% in any one security.

    As your investing capital increases, you can allocate more to investing. When your unsure of your trading, just keep a bigger percentage in reserve, even it means only investing 50% of your total capital.

    Your plan looks looks sound, although you speak of “buying power” personally, I am not big on using margin, I seen too many people get caught or abuse buying power,
    The only real use of the margin account should be for short selling, or option writing, but you keep your margin in the high 40% or at very respectable controlable amount.

    Trading only a few positions is in your best interest, since they are totally manageable. you can always increase the quantity of your trades.

    Regardless of what plan you use, just keep have the discipline to keep to the rules that you set for yourself. You have to do what you feel comfortable with, don’t just follow others. You’ll make money your way, so what if someone makes more, if you are comfortable in what your doing, stay that way.

    Here are some books that may help
    Trading For a Living by Alexander Elder
    Mastering the Trade” by John Caster
    How to Make Money in Stocks” by William O’Neil
    The Disciplined Trader by Mark Douglas

    Good luck, just keep your discipline

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