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Allocating trades across multiple accounts.

Discussion in 'General Discussion' started by Randy Schwartzenburg, Nov 25, 2015.

  1. Randy Schwartzenburg

    Randy Schwartzenburg Well-Known Member

    I'm considering placing all my White Rhino trades in one account. All my weeklies in one account and M3s in one account and manage it that way instead of splitting them up and then having to go back and forth between accounts. Seems that managing 30 contracts in one account would be easier and less mistakes than 10 contracts in 3 accounts.

    Anyone have any ideas on how to allocate trades across accounts.
     
  2. Al G.

    Al G. Well-Known Member

    Hello Randy, what weekly strategies do you trade?

    Thanks,
    Al
     
  3. Randy Schwartzenburg

    Randy Schwartzenburg Well-Known Member

    I do a 14 Day IFly with unbalanced wings. Requires watching and adjusting or you can get down very quickly.
     
    Al G. likes this.
  4. Chuck

    Chuck Active Member

    I like this question. To smooth out drawdowns on any one trade, I like to spread out my trades into different accounts. For example, account1 this month got a DEC bearish butterfly, account2 got the DEC Rhino, account 3 got the JAN Rhino, account 4 got a DEC bearish butterfly, and account 5 got a FEB sea monster yesterday. My next trade will go to account1 and depending on the market action it will be either a FEB sea monster or JAN/FEB bearish butterfly. Account 2 will get the trade account1 doesn’t. Each trade is opened a different day, so I spread out any entry risk. Over time each account will a similar mix over the year. This strategy would be better if I would manage more trades, but I am limited to be able to manage up to 5 trades with my lifestyle. Trade risk is limited to 3 to 5% (based on planned capital on any trade) of account balance. I am sure that many others will have a much better approach than this that will work for them. I am happy with this approach for now.
     
    Last edited: Dec 3, 2015
  5. Andrei

    Andrei Well-Known Member

    I think this a problem with managing complex trades without them stepping on each other. The only way I managed to solve it is to have only one Month/Underlying combination per account. That is I can't have both BB and M3 in DEC/RUT in the same account. It is very inefficient to manage it this way, but it works. I am trading with TOS and I don't think they offer sub-accounts within a lager account. Also it is not allowed to have more than one margin account in the same name, so it creates more problems.

    Chuck, when you say trade risk is limited to 3%-5%, how do you measure risk: max planned loss, planned capital, margin?

    I would love to hear any ideas and approaches to the problem.
     
  6. Tim R

    Tim R Active Member

    Andrei - If you are using TOS, you can manage multiple trades on the same underlying by using Groups under the monitor tab to separate the options into a group for each trade structure (this will only work if the trades don't have any options with the same option strike/expiry). If that is the case, you can separate the management of them by using simulated positions for each trade with real positions hidden. The caveat being you have to do an import/export process of each trade's positions to switch between the trades. Not as clean as your solution of keeping the trades isolated to one per month per account, but is workable.
     
  7. Andrei

    Andrei Well-Known Member

    Thank you Tim, I have my trades in subgroups already, but does not solve the problem because it is almost impossible to avoid options with the same strike/expiry when adjusting similar structures such as BB and M3 or ROCK. Thus I am using separate accounts.
     
  8. Randy Schwartzenburg

    Randy Schwartzenburg Well-Known Member

     
  9. Randy Schwartzenburg

    Randy Schwartzenburg Well-Known Member

    My purpose of placing all the contracts of a certain style trade was to reduce the mistakes. Splitting the styles over 3 accounts means I have to switch back and forth to adj and take off. Then when two of the trades are the same and the other is diff due to not getting filled or making a mistake then it get even more complicated. Life seems easier when it's simple.
     
    GreenZone likes this.
  10. Chuck

    Chuck Active Member

    Andrei, thanks for your question. i have edited my earlier response to clarify it.
     
  11. Andrei

    Andrei Well-Known Member

    Thank you Chuck,
    I always like to learn about how other people manage their risk. How do you deal with the combined exposure for all trades?
     
  12. Chuck

    Chuck Active Member

    That is how I select the next one to open. For example, my existing trades Rhino (small negative delta (~-11)), BB (more negative delta (~-27)), and BWB (little positive delta (~+1)) all nets to negative delta, so I opened another BWB (with little a positive delta (~+3)) this morning. Next week I will do the same process.
     

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