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Square Root Rule Application When Withdrawing Capital
#440801
05/02/14 14:34
05/02/14 14:34
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Joined: Jun 2013
Posts: 1,609
DdlV
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OP
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Joined: Jun 2013
Posts: 1,609
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Hi jcl. I've worked up the numbers below and have a couple of questions: 1) Are the basic idea and calculations correct? 2) When Capital is removed and Margin/Risk reset, does the Withdrawn amount stay the same, or it is pro-rated to the new Capital? In the example below, when $1,500 of the Capital is removed, should the To Date w/d's remain $2,250, or should To Date w/d's become pro-rated to the new Capital as (3500/5000)*2250=$1,575? Thanks.
Xact CR Net Account To Date StrategyMust
Date In/(Out)CR Balance w/d's Balance Remain Avail WithdrawNotes
$5,000 $5,000 M/R 50/10 Initial funding w/ appropriate M/R settings
$5,000 $7,000 $0 $7,000 $5,916 $1,084 $1,000 Up enough to withdraw <Square Root
$5,000 $5,000 $1,000 $6,000 $5,477 $0 Down – can't withdraw
$5,000 $7,000 $1,000 $8,000 $6,325 $675 $250 Up enough to withdraw <Square Root
$5,000 $8,000 $1,250 $9,250 $6,801 $1,199 $1,000 Up enough to withdraw <Square Root
-$1,500 $3,500 M/R 30/10 Remove some Capital – reset M/R
$3,500 $5,000 $2,250 $7,250 $5,037 $0 Down – can't withdraw
$3,500 $6,000 $2,250 $8,250 $5,374 $626 Up enough to withdraw <Square Root
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Re: Square Root Rule Application When Withdrawing Capital
[Re: jcl]
#440890
05/05/14 12:16
05/05/14 12:16
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Joined: Jun 2013
Posts: 1,609
DdlV
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OP
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Hi jcl. I think there's a misunderstanding. First, I'm looking at it the other way around. The concept is reducing the Capital, which I understand requires a consequent reduction in Margin/Risk.
Second, yes, I understand that the reduced Capital needs to be used in all following Square Root Rule calculations, not the original Capital.
My question comes Third: In computing the Strategy's Balance, do I add back in all the withdrawals that have been taken unchanged, or do I pro-rate them according to the current vs. original Capital, since part of those withdrawals relates to Capital no longer present? In terms of the numbers above, in the last 2 lines, To date w/d's column, should the entry be $2,250 or $1,575?
Thanks.
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Re: Square Root Rule Application When Withdrawing Capital
[Re: jcl]
#441263
05/16/14 14:57
05/16/14 14:57
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Joined: Jun 2013
Posts: 1,609
DdlV
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Joined: Jun 2013
Posts: 1,609
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