In the trading business, it is customary to think of earning money very quickly. This, in order to accumulate it in the same trading account with the aim of obtaining stronger leverage in future operations.
What causes this behavior is a lack of discipline and accounting what has been gained. Also, an exposure to more substantial losses when the size of the operation is increased with what has been gained.
That is where the necessity to withdraw what has been gained to recognize it physically in another account arises. That means that it is part of a business operation methodology where weekly, I seek to withdraw my profit.
This vector was already commented in rule 3 of emotional stability, but it never hurts to repeat its concept; that in my case came to me by an experienced trader from the US who told me that his way of trading had changed ever since he started practicing this. I did not fully understand the concept until I started practicing it. That’s when I realized how important it is in the mind of the operator to see his profit out of the market.
It is something as simple as withdrawing from my trading account what has been earned on a weekly basis, to save transfer expenses, to my bank account. This provides, in my head, a subtle difference between the money that I have in my personal account and the money that I have in my broker account for trading.
The most vital thing is that the money I’ve set aside for trading is a precise amount; meaning that the money in the trading account is a sum whose loss does not mean I will not be qualified to pay for the basic expenses to live. Trading with that kind of money puts an enormous pressure at the time of competing in the market and this is definitely not good when actioning on the market.
Having a clear idea that the money in my personal bank account and the money I trade with, are two separate things, is essential. Separating them on a weekly basis reinforces week by week how my trading is going. This also provides control of how much money I allow myself to withdraw from my account; recognizing that the amount left for trading is the money that allows later operations and that if I lose it, it will not influence my everyday life.
For that reason, banking profits gives the trader a very useful particular financial order that grants you to validate week by week where you stand with respect to your trading.
It is crucial to emphasize that trading is a profession like any other, in which if you lose your attention for a moment, you will pay for that mistake with your own money. Unfortunately, the punishment is immediate and the loss deepens as you move away from your risk parameters.