A prop trader splits a $200,000 account into four $50,000 accounts and trades only one per week, risking 1% per trade. In a losing month, this limits losses to $1,920 while keeping two accounts untouched, versus a $7,000 loss on a single account. The unused capital recovers faster in profitable months.
This is how to master prop trading. This is how to bring your prop trading to a next level using math. Let's compare 2 traders. The first one is trading with a $200K account. Me instead, I have 4 $50K accounts. I will still risk 1% in every account, but the difference is this. I will trade one account per week. Let's assume I closed a month at -4% because my strategy went in drawdown that month. I had -7%, +3%, -4%, and +4%. Here instead, I just gained a -4%. Here, In a losing month, I made 2.8K and I still have 2 accounts that are safe. Instead, here I will be at 1.92K. How much did I earn that month? Zero. Of course, this will reward me if the strategy loses. If the strategy wins, here I will get more money. But what is the interesting thing about this method? What is the power of B of making money the next month? Slower, because he needs to recover the drawdown first. The trader A still has 2 accounts in breakeven. So he has more chance to make money other months. What I use for Trade Profit.
