After trading for several years, traders that make it run into a plateau of sorts. They hit an invisible ceiling on their profits and become stagnant. If you have this problem, congratulations, you’ve made it to professional profitable trading!
There is a great sense of accomplishment one feels when reviewing a rising liquidity curve. Since we are in this profession to consistently bring home the bacon, you may have concerns on how one can take profits out of a trading account, overcome profit plateaus, and still feel the exhilaration of being an exceptional trader when the rising liquidity curve must trend lower when withdrawing profits.
Perhaps you have $40,000 that you want to trade. Rather than trading the whole wad, let’s take a portion of that capital and trade with it. That way in case things go south, you have a reserve of capital to fall back on.
Let’s say you start your trading account with $10,000. Your goal is to multiply this account 2.5 times in value, a reasonable goal for a trader especially in options, futures, and other leveraged trades. It doesn’t matter how fast you reach your goal of $25,000 ($10,000 x 2.5). It could be a month or several years. Sometimes payouts can be huge with leveraged accounts, but other times the profits trickle in. Your trading account reaches your goal. Now what do you do? Pay yourself!
One of Mark Douglas’ rules for consistency is paying yourself as the market makes money available to you. That’s right: pay yourself for your expertise in the markets. I suggest you take your original starting capital of $10,000, add an additional $2,500, and deposit the money into your personal account.
This $12,500 is your reward for what you do. The emotional reward is worth it alone. Perhaps it’s time to get something you wanted or need … even just a nice dinner out with your loved one helps.
Now you take the $12,500 remaining in your account and again set a goal to multiply it 2.5 times — equaling $31,250. When you get there, take half your account of $15,625 and pay yourself again!
You guessed it! Now take your remaining $15,625 and again set a goal to multiply it 2.5 times to $39,062.50. When you reach that target, take out half and continue upward.
Obviously, you can tweak this method for your own needs. Perhaps you take more than half to pay yourself. I’ll leave that up to your creativity. The process had worked for me, and I am certain it will help you overcome the inevitable profit plateau.
I’ve slightly modified the pay yourself row below to make the starting capital row a more common number, but you will see you will always be paying yourself more with each target hit.
| Starting Capital | 2.5 X TARGET | Pay Yourself Withdrawal |
| 2,500 | 6,250 | 3,125 |
| 3,125 | 7,812.50 | 3,812.50 |
| 4,000 | 10,000 | 5,000 |
| 5,000 | 12,500 | 6,250 |
| 6,250 | 15,625 | 7,625 |
| 8,000 | 20,000 | 10,000 |
| 10,000 | 25,000 | 12,500 |
| 12,500 | 31,250 | 15,625 |
| 15,625 | 39,062.50 | 19,062.50 |
| 20,000 | 50,000 | 25,000 |
| And so on… | And so on… | And so on… |
We are in this adventure to grow, and part of that growth is abundance in profit taking. Use The Trading Profit Harvester and reap what you have been sowing.
Enuf said.