To use chat, please login.
Back to contacts

Drawdown Question

Pip King
MiltonMurray
Mar 06 2016 at 08:26
2 posts
Hello,

  Fairly new trader here. As l am fine tuning my strategy l've taken a few big losses not completely understanding margins at the time. l've since improved and even have put myself back in the black. My profit is well above what it was before my loss as well as my win percentage has significantly improved. My question is how long will it take for my drawdown percentage to improve? Even with all of the gains over the past 45 days or so, my drawdown remains the same.

Thanks,

MM

aidysproule
Mar 09 2016 at 17:53
18 posts
Your drawdown will never improve. Your DD is the difference from the highest to lowest point in the history of the account and will never improve unless you open another account and start again.

Pip King
MiltonMurray
Mar 10 2016 at 07:15
2 posts
Augustus Z. Vranken
CopyGus
Mar 15 2016 at 10:57
2 posts
If you want present your trading history to prospects (investors, traders, students), keep your history would be a good idea.
This way people can see how you have improved over time and that your strategy is durable.

vontogr (togr)
Mar 15 2016 at 12:07
4862 posts
CopyGus posted:
If you want present your trading history to prospects (investors, traders, students), keep your history would be a good idea.
This way people can see how you have improved over time and that your strategy is durable.


While this idea is good it wont work well because on MFB you can see what was maximum DD but not clearly see when this peak happened.

Augustus Z. Vranken
CopyGus
Mar 15 2016 at 13:13
2 posts
togr posted:
CopyGus posted:
If you want present your trading history to prospects (investors, traders, students), keep your history would be a good idea.
This way people can see how you have improved over time and that your strategy is durable.


While this idea is good it wont work well because on MFB you can see what was maximum DD but not clearly see when this peak happened.



Thanks for your advice. I guess I will start a new account on MFXB, with another captital amount.

theHand
Mar 15 2016 at 17:09
365 posts
Your DD is half the volatility in your equity curve. The other half being the profit. The bigger your swings the bigger your chance of a wipe out.

You can't look at the DD in isolation alone. How much is it for how much gain ? If it's 20% max for 1000% annual gain no issue, if it's 20% for 20% annual gain big issue.

You'll always draw down as long as you trade. The question is how much risk is your portfolio at ? And that's critical.

Large draw downs severely hampers your chances of success. If you have $10 000 and lose 10% you have $9 000. If you make 10% on $9 000 you have $9 900. By the time you have a 50% DD you have to make 100% just to breakeven.

So you have to take draw downs very seriously. Very likely it's not something you can cure with practice, but rather something you need to embrace. An alternative would be to study your DD's and profits very closely and go very small on trade sizes very quickly on losses, so you can have your DD's on small trades, then when you start being profitable again go big quick.

Hope that is of help.


Please login to comment .