What Is Capital Partitioning ? How will it help you as a trader?
Hi everyone:
Let's talk about capital partitioning, which is a risk management approach for consistent traders to utilize to allow them to leverage their capital.
You may ask what exactly is capital partitioning ? well to simply put it in words, it is basically divide up your trading $ in the current trading account into 2 or more sub accounts.
So what's the point of doing that you may ask ?
Well, with leverage, a consistent trader does not require to have their entire money deposit into one trading account.
They can allocate the asset into different trading accounts to reduce risk as well as trading different markets available
Let's take a look here:
Say I have a $100,000 trading capital. I understand risk management, trading psychology, and will not over trade, over risk and revenge trade.
Hence, it's in my best interest to divide the $ in this account into a different accounts, or simply in a liquid-able account such as a savings account, stocks, bond..etc
Here are a few scenarios that you can implement into your trading accounts.
Understand that the % to allocate, what other trading accounts to deposit $ into, and how to move around the $ is totally up to you as a trader.
The most important is to make sure you are a consistent trader before you approach this type of method.
As more accounts you divide your capital into, the more % you will need to risk per account as you need to open bigger position sizes now.
Any questions, comments, or feedback welcome to let me know.
Thank you
I will share other risk management educational videos that can be helpful for you.
Risk Management: When/How to move SL to BE and to profit in a running trade ?
Risk Management: How to filter trading opportunities if multiple setups are presenting entries:
Risk Management: 3 different entries on how to enter the impulsive phrase of price action
Risk Management 101
Risk Management: How to set a Take Profit (TP) for your trades
Risk Management: How to Enter and set SL and TP for an impulse move in the market
Risk Management: How to scale in the impulsive phrase of the market condition?
Risk Management: Combine everything you learn to prevent blowing a trading account
Let's talk about capital partitioning, which is a risk management approach for consistent traders to utilize to allow them to leverage their capital.
You may ask what exactly is capital partitioning ? well to simply put it in words, it is basically divide up your trading $ in the current trading account into 2 or more sub accounts.
So what's the point of doing that you may ask ?
Well, with leverage, a consistent trader does not require to have their entire money deposit into one trading account.
They can allocate the asset into different trading accounts to reduce risk as well as trading different markets available
Let's take a look here:
Say I have a $100,000 trading capital. I understand risk management, trading psychology, and will not over trade, over risk and revenge trade.
Hence, it's in my best interest to divide the $ in this account into a different accounts, or simply in a liquid-able account such as a savings account, stocks, bond..etc
Here are a few scenarios that you can implement into your trading accounts.
Understand that the % to allocate, what other trading accounts to deposit $ into, and how to move around the $ is totally up to you as a trader.
The most important is to make sure you are a consistent trader before you approach this type of method.
As more accounts you divide your capital into, the more % you will need to risk per account as you need to open bigger position sizes now.
Any questions, comments, or feedback welcome to let me know.
Thank you
I will share other risk management educational videos that can be helpful for you.
Risk Management: When/How to move SL to BE and to profit in a running trade ?
Risk Management: How to filter trading opportunities if multiple setups are presenting entries:
Risk Management: 3 different entries on how to enter the impulsive phrase of price action
Risk Management 101
Risk Management: How to set a Take Profit (TP) for your trades
Risk Management: How to Enter and set SL and TP for an impulse move in the market
Risk Management: How to scale in the impulsive phrase of the market condition?
Risk Management: Combine everything you learn to prevent blowing a trading account
Related publications
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