All language subtitles for 4. capital partitioning US

probably say that if you were
trading lower than 50 to1

going to be quite large for
your account size so yeah

pull out to your safe portion
in another account I would

trade 100-1 leverage then you
only ever engage a very small

leverage ratio determines your
partition ratio because if you

investment property or a car
with it for example because if

you have enough margin to keep
trading so remember even though

true account value now the
second rule is that your

extremely liquid so the portion
of capital that you remove from

being that you need to keep
your safe portion of capital

obviously has the same effect
as trading 1% risk on your

little bit of research on that
and you may want to get some

something called a mortgage
offset account so just do a

access your funds then at least
your capital is more secure

can increase your overall
return by potentially another

broker as you're risking 2% per
trade on your brokerage account

just spoken about a 6040 or
even an 8020, but there are two

just one so essentially your
risk is half also you can earn

do which we're going to take a
look at now so to reduce the

you know financial advice so
since you'll be trading 2% risk

right because only half of your
capital is actually stored in

funds in just that one account.
So if your account size is 100,

this but you know that there
could be a there could be a

there. So whenever you are
calculating your position size

some sort a savings account and
then just double your trade

calculation so that you are
risking a percentage of your

yielding investment account now
I appreciate in the current

start to run into some trouble
when you're risking 2% across

buy orders on the other side of
the market to fill their sell

encourage more secure asset
diversification and you also

balance in your brokerage
account when you make that

segregated account you need to
add this to your account

capital the the safe portion
that you have put in a

a time and especially if you're
the type of trader who uses

so you can move fifty into
another investment account of

but with no disadvantage to
your trading activity at all so

partitioning because it's
pretty likely you will not have

point of this isn't to scare
you these events are extremely

two main benefits the first is
that in the extremely unlikely

stand to increase your overall
percentage returns even if it's

you are still risking 1% of
your total account size right

even getting filled and just a
massive floating loss which

on the 50, 000 that remains in
your trading account this

you have a mortgage you can
also look into opening

partitioning is not necessarily
going to work too well for you.

you can petition a capital with
say a 50/ 50 spit like we've

perspective although it's only
a 10% drawdown based on your

leverage it's probably not
advisable to be using capital

the charts let alone whilst
you're actually in a trade it's

their stop loss just below that
level and then when this goes

interest at the moment but you
know that's the idea behind it

so segregating your account
into different partitions it

yeah the brokers were just not
prepared for yeah I mean the

rules that you really need to
keep in mind the first one

leverage and by segregating
your account you essentially

account right which is going to
be 1, 000, but because you only

trading a 100, 000 account so
if you edit a 20, 000 pound

just a little bit at the moment
with the interest that a lot of

means that you should not go
out and you know buy an

you hit a long run of draw
downs then you meet you you may

drawdown this will appear as
40% draw down from the broker's

your trading account you need
to keep it liquid and this

of their trading capital tied
up in their brokerage account

enough available margin to open
more than a couple positions at

need to tip more money into
your FX account to ensure that

event that something happens to
your broker and you cannot

your leverage the lower you'll
be able to pull out you know

risk you just need to remember
to always add the amount of

called capital partitioning so
capital partitioning it's a

size for each position that you
then take in the market because

nought. 5- 3% per year right
it's better than nothing now if

if you only trade say 20 to1
leverage however then you can

unless you have very high
leverage then capital

amount of capital and risking
2% position is no problem but

have 50, 000 pounds in your
account this will appear to the

quite small stop losses that
means that your lot size is

management routine that I would
recommend for any student

a guaranteed return from the
other half that sits in a you

multiple positions
simultaneously and the lower

everyone who got long right
where do you think they put

so you're still risking 1%
based on $100, 000 in your

acts as a hedge against the
risk of having all of your

since it is held in two
separate accounts instead of

to protect yourself from but
there are some things you can

your exposure to any broker
risk we could use a technique

brokers went under they went
completely bankrupt because a

movement that is you know on
this pair in a single day and

initial hundred grand account
so therefore you will receive

000 what you can do is move 50,
000 into a high interest

negative balance and they owe
money to the broker that they

know quote unquote high
interest earners account this

longer holding that peg you
know to the euro and if we

the amount of slippage that
occurred literally loads of

risk from Blackspan events like
the Swiss frankly pegging and

true account value right so
capital partitioning really has

around that time you know
compared to other times of the

order right to fill their stop
loss so then people were

economic climate there isn't
really such thing as high

opt for when their account
grows beyond a certain

wiped out literally in the
space of a few seconds with

terrorist attack you never know
and there can be insane periods

So yeah just to summarize
capital partitioning is a risk

right there's not enough
liquidity there's not enough

trading a large account as long
as you have pretty high

broker and reduce the
opportunity cost of having all

of volatility in the market you
know which which it can be hard

may as well trade in the side
of the bank right so everyone

happened right something might
not happen as drastically as

know in your lifetime or even
just whilst you happen to be in

your account balance may save
50 grand you are essentially

banks are just about managing
to offer. So yeah that wraps it

threshold size and they wish to
both reduce their exposure to

the benefits and security of
diversifying your part capital

would obviously see this
currency pair go up right

slightly more advanced risk
management routine that traders

actually just measure this day
roughly in one single day that

were never going to be able to
pay back because you know

lot of their clients right
accounts that went into

getting filled you know all the
way down here or you know not

pretty much next to zero but
you need to be aware that you

quite a few brokers and
probably thousands of traders

came back down around in the
2014 2015 a lot of traders saw

then

extremely rare I mean the
chances of this happening you

well start of the year not a
lot of liquidity in the markets

this is a pretty easy trade
central bank's going to step in

there's literally no words that
can describe how insane of a

know anything can happen and
these these events have

obviously if if if the Swiss
Frank itself is bearish and

this move that came in so they
suddenly completely unannounced

was getting long down here now
I'm sure you can probably start

currency to the euro at the
rate of 120 so they essentially

heavily essentially forcing the
currency pair came up so as we

year and we just paid this
forward a couple of days and

euros with it essentially to
weaken the Swiss frank so that

just got released to the market
that the central bank were no

just have a quick little look
at what went down so

simple the Swiss bank was
essentially pegging their

had this pretty much artificial
floor within here that whenever

but this was kind of around the
time that I was really starting

move peaked at just over 2, 300
pips in a single day Uh that

to guess what happens next but
yeah around kind of January as

then you know a lot of traders
knew this and then that every

time price came down the
central bank would step in

heavy selling with the Swiss
Frank and they were buying

to get into trading when this
happened and yeah well let's

world that happened was with
the Swiss the pegging in 2015

price came down they
essentially did some really

essentially to keep a sort of
long story quite short and

so some of you may not be aware
of this or may remember this

unplanned events that can hit
the market right now one of

periods of time in the market
when we know you know around

announcements and then also
avoid trading around those

probably the most famous things
if you've been in the trading

prepare for this is to look at
those planned news

right when liquidity is to be
low but as we know there can be

calculated to potentially lose
now we know that one way we can

the agent session and the daily
rollover around spread out

anticipated right more than the
risk that you had originally

when there you know can be
volatile events in the market

up. See you guys in the next
lesson.

can experience you know losing
more than you had initially

and you know we've we've
realized how that can happen

and when you combine that with
sort of low liquidity yeah you

In the previous lesson we've
now kind of looked at slippage