One of the main pieces of day trading is getting a grip on the day-to-day financial management of it. Without following a strict pattern, investors can get caught in the rudimentary parts of mentally spending and saving.
Managing the activities of day trading has a lot to do with managing the mental part of money. How does money affect action? Is there an emotional component with a fear of loss? These are significant questions that help separate the emotional part of managing money with the practical.
Setting Up the Bank
Many investors will remove the fear of loss by having a bank. A bank is a term widely used in poker. It states the working money all investors have to “play with.” The term “play with” may be a bit dismissive because it implies the money can be lost, no problem. This is true to an extent.
The bank money is money that can actively be traded and used for the daily activity. The money that is not allocated for this purpose is separated. It is inaccessible. It is the amount in reserve that acts as a protective buffer. If an investor was to lose everything in their bank, they would have reserve money that can be allocated.
Some investors will set it up so they move money to and from the account in certain intervals. For example, some investors move $50,000 at the end of every year from the reserve to the bank, regardless of performance. Others may add to the bank based on when they reach certain thresholds or move it back.
Managing this part is imperative because it keeps day traders on a logical path. It separates the money they can actively invest with from the money that is protected. It helps diminish the fear of loss. Markus Heitkoetter has played with this dynamic for years and has followed a rather strict formula for handling the mental management of his finances.
To learn more about him and his history in the field, visit his official LinkedIn page. It can be found at www.LinkedIn.com/MarkusHeitkoetter. It will offer a glimpse into how Markus has harnessed great success in the day-to-day operations of day trading.