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Reserves: How much do you require to feel comfortable trading?
This question is specifically aimed at others who are trading for a living, but obviously I'm open to all opinions.
I'm talking specifically about non-trading money. Seems to me as if having adequate capital reserves affords somebody more patience than somebody who lacks them. How much did you require yourself to have in order to feel comfortable in executing your trading plan?
Can you help answer these questions from other members on NexusFi?
Please don't take this the wrong way. Your question to me sounds similar to "how long does it take for you to become successful at trading." For everyone it's going to be a different number, for some it could be astronomical and for others not so much.
If you have a solid trading plan/strategy you should be able to execute regardless of the number in reserves.
Confidence is key to comfortably executing your plan. Happy Trading!
To answer your question nonetheless, for me it would be like 4x the capital required for your strategy.
So if you need $50k to trade properly let's say, then you'd better have $200k in the bank too... That's roughly my basic approach, assuming that with $50k of course you can generate and support all your financial needs.
Successful people will do what unsuccessful people won't or can't do!
I had enough to live on for 2 years. So I knew I didn't have to earn a single cent for 2 years and that would be ok.
Trading full time takes a huge amount of time and experience to get right. Only having enough reserves for a few months and expecting to crack this in that time is guaranteed to fail.
after basic necessities you also want to have enough money to treat yourself once or twice a week just to keep a level head otherwise you're going to feel like all work and no play makes jack a dull boy.
R.I.P. Joseph Bach (Itchymoku), 1987-2018.
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I like what everyone wrote....the common theme is having separate accounts so mentally you feel you can detach from a certain amount of money....which is both good and bad.
to each their own....my own view is similar to dave ramsey's teachings....
having quick cash (1k, 2k 5k, 10k...whatever is comfortable)
have liquid cash (money market/bank)
have savings for 6 to 12 months
have several trading accounts
have mutual fund accounts
for me....just having 10k liquid puts me at ease...knowing if my trading account gets stolen by my broker, trading glitch, whatever it is...if I go bankrupt....I have some time to rest and recoup.
