Cashing Out Your Profits

Everybody loves money, which means everybody loves big accounts. One thing some people do not realized is that an account size with a broker means nothing other than digits which allow you to trade larger digits(lot size). Trading is risky! If you do not know that already please know that you can lose more than your initial investment.

With risk comes the need for risk management. The best way of risk management is to cash out your deposit/capital. Once you have cash out on your capital, it is time to cash out on your profits.As soon as we learn to diligently cash out from our broker the trading risk is drastically reduce. As we risk our equity when trading, if our capital is withdrawn the trading becomes somewhat risk free.

Understand that we would all like to grow our account. Set a target, once the target is hit, start gradually cashing out. My personal target is to be able to cash out 30% of my profit every month. As I am growing my account my immediate need is different, so what I do is to cash out a comfortable amount every $5,000 materialized account growth. Be very careful when you cash out your profits, it does impact the available funds and change the trading size margin. I personally would try to close all position when cashing our profit to ensure that no extra risk is impose on open position in case a draw-down is faced. 

All new trade entry size is revised after a withdrawal. This is how mechanical I am trying to be when trading. One thing to note is, when your account grows priority change. Capital appreciation is now secondary to capital protection. Do try to revise your trade size and keep them small. Increase of trade size when an account have grown may not necessary benefit you if the trend has change. You must be able to ride out a bad month.Less profit is better than any lost on a bad month.

Remember.. cash out your profits..

-DC