I am interested to know from fellow traders, how big do you trade in relation to your net asset?
For most successful traders, the return on trading capital should exceed most other investments available. So this suggests that one should put every available $ as his/her trading capital if one was to consider on economics alone.
But then there are many realities to suggest that one should not do that...
- Desire for passive income (also makes it easier to take breaks)
- The need for back up money through a bad patch or consecutive flat/negative years
- Genuine alternate investment opportunity with different return profile and drivers
- Management of counterparty risks (brokers do go bankrupt)
- Control of overall stress factors that comes with bad losses, large drawdowns and other blackswans)
For me, I currently deploys ~35% of my net worth (excluding my PPOR) in my trading. It also means that I target earning ~8-15% of my net worth each year.
So what are people's views?