Jun 14 2013 at 04:56
What should be a Reasonable Drawdown for an Expected monthly Gain.
And How much DrawDown is too much?
And How much DrawDown is too much?
There are so many people out there who will tell you that you can’t. What you’ve got to do is turn around and say, ‘watch me’
Jun 14 2013 at 11:43
r u trading to make money?! i mean u trade ur own money?!
Jun 14 2013 at 12:06
Yeah trading with own money. As well as considering of opening a PAMM so I am wondering as an investor what would be a reasonable DD and Monthly %?
There are so many people out there who will tell you that you can’t. What you’ve got to do is turn around and say, ‘watch me’
Jun 14 2013 at 12:09
for ur own money u shouldnt worry much about dd since u making money... its only a matter of ur trading style.... long term trading means high dd... sometime i pass 50% dd but its ok since i still can make money...
for Pamm n investors... all of them like to see below 20% dd...
for Pamm n investors... all of them like to see below 20% dd...
Jun 14 2013 at 12:51
wow 20% DD .. for a 20% DD what would investors expect in monthly gains?
There are so many people out there who will tell you that you can’t. What you’ve got to do is turn around and say, ‘watch me’
Jun 14 2013 at 15:45
'investment grade' returns are typically 2-3X DD on a monthly basis, for example if you generate a return of 6% against a DD of 2-3%, this is typically considered a reasonable level of risk
Jul 26 2013 at 08:53
I think, there is no standard about this stuff, cause every investor have their own perspective, for example some investor tolerate 50% DD but some only tolerate bellow 5%, but of course low DD% are most smart investor will choose.
if I were investor and I saw signal or money manager that can get profit more than 100% profit permonth,I will invest with them even if DD % are more than 50% but of course I will not invest big money! maybe $100 is more than enough!
cause if their system really works and can get profit more than 100% next year my $100 money will growth 10x times :) i.e 1k usd. if my money growth 10x in a years, maybe I will increase my investment next years 5 times, and so on!
but if I want to invest 10k-100k, definitely I will choose the lowest DD under 5% , cause most of us, can't tolerate DD above 10%! imagine if you invest 100k and seeing 10k floating minus in your account! I bet you cant sleep, eat well at night 😇
if I were investor and I saw signal or money manager that can get profit more than 100% profit permonth,I will invest with them even if DD % are more than 50% but of course I will not invest big money! maybe $100 is more than enough!
cause if their system really works and can get profit more than 100% next year my $100 money will growth 10x times :) i.e 1k usd. if my money growth 10x in a years, maybe I will increase my investment next years 5 times, and so on!
but if I want to invest 10k-100k, definitely I will choose the lowest DD under 5% , cause most of us, can't tolerate DD above 10%! imagine if you invest 100k and seeing 10k floating minus in your account! I bet you cant sleep, eat well at night 😇
Dear all Trader! Good night and sleep well ;)
Jul 28 2013 at 10:25
The specific strategy and its corresponding track record will be the centre fold of an investors decision and the relevant peak to trough DD / volatility.
If I was aggressive and invested a notional value in relation to my overall cash wealth, then I'd be more happy to incur a larger draw-down. (This is thanks to leverage supplied by liquidity providers.)
On the other hand, if I were a larger investor, and wanted to invest more cash into the given fund/manager, then I may not have the same leverage ratio's available to me because of the sheer size of the deposited funds - i.e. £1m+. In these circumstances, why would you want to take a large draw-down of say 20%, if the standard of living and your own personal gains are not too hard to reach any more, considering you have larger funds invested?
So in a nut-shell, it's really to do with personal goals, relevant to the funds invested, the managers volatility to gains ratio, historical track record and the strategy employed.
£10,000.00 = 35% DD = 90% Annual = £9,000.00 (Tonnes of leverage easily available)
£100,000 = 11.6% DD = 30% Annual = £30,000.00 (Still lots of leverage available - just not as much used.)
£1,000,000.00 = 5% DD = 12.85% Annual = £128,500.00 (Practically no leverage.)
If I was aggressive and invested a notional value in relation to my overall cash wealth, then I'd be more happy to incur a larger draw-down. (This is thanks to leverage supplied by liquidity providers.)
On the other hand, if I were a larger investor, and wanted to invest more cash into the given fund/manager, then I may not have the same leverage ratio's available to me because of the sheer size of the deposited funds - i.e. £1m+. In these circumstances, why would you want to take a large draw-down of say 20%, if the standard of living and your own personal gains are not too hard to reach any more, considering you have larger funds invested?
So in a nut-shell, it's really to do with personal goals, relevant to the funds invested, the managers volatility to gains ratio, historical track record and the strategy employed.
£10,000.00 = 35% DD = 90% Annual = £9,000.00 (Tonnes of leverage easily available)
£100,000 = 11.6% DD = 30% Annual = £30,000.00 (Still lots of leverage available - just not as much used.)
£1,000,000.00 = 5% DD = 12.85% Annual = £128,500.00 (Practically no leverage.)
"Taking responsibility is the cornerstone to a winning attitude"
Jul 28 2013 at 10:40
The specific strategy and its corresponding track record will be the centre fold of an investors decision and the relevant peak to trough DD / volatility.
If I was aggressive and invested a notional value in relation to my overall cash wealth, then I'd be more happy to incur a larger draw-down. (This is thanks to leverage supplied by liquidity providers.)
On the other hand, if I were a larger investor, and wanted to invest more cash into the given fund/manager, then I may not have the same leverage ratio's available to me because of the sheer size of the deposited funds - i.e. £1m+. In these circumstances, why would you want to take a large draw-down of say 20%, if the standard of living and your own personal gains are not too hard to reach any more, considering you have larger funds invested?
So in a nut-shell, it's really to do with personal goals, relevant to the funds invested, the managers volatility to gains ratio, historical track record and the strategy employed.
£10,000.00 = 35% DD = 90% Annual = £9,000.00 (Tonnes of leverage easily available)
£100,000 = 11.6% DD = 30% Annual = £30,000.00 (Still lots of leverage available - just not as much used.)
£1,000,000.00 = 5% DD = 12.85% Annual = £128,500.00 (Practically no leverage.)
If I was aggressive and invested a notional value in relation to my overall cash wealth, then I'd be more happy to incur a larger draw-down. (This is thanks to leverage supplied by liquidity providers.)
On the other hand, if I were a larger investor, and wanted to invest more cash into the given fund/manager, then I may not have the same leverage ratio's available to me because of the sheer size of the deposited funds - i.e. £1m+. In these circumstances, why would you want to take a large draw-down of say 20%, if the standard of living and your own personal gains are not too hard to reach any more, considering you have larger funds invested?
So in a nut-shell, it's really to do with personal goals, relevant to the funds invested, the managers volatility to gains ratio, historical track record and the strategy employed.
£10,000.00 = 35% DD = 90% Annual = £9,000.00 (Tonnes of leverage easily available)
£100,000 = 11.6% DD = 30% Annual = £30,000.00 (Still lots of leverage available - just not as much used.)
£1,000,000.00 = 5% DD = 12.85% Annual = £128,500.00 (Practically no leverage.)
"Taking responsibility is the cornerstone to a winning attitude"
Jul 28 2013 at 11:22
It is more important to understand the strategy behind the system.
What has the strategy been tested in?
- Long term, private account? No good for investors.
Long term 99% accurate historical data.....then it depends on the system type.
- Does it use a small stoploss??? No good for investors.
- What types of markets does it deal well with? Tight ranging, wide ranging, whipsawing, moderate trending(<600 pips without major pullback), extreme trending(>600 pips without major pullback), unexpected news breaks, sideways-drifting, trend-drifting. Really, the only market-type that is incompatible with the group is extreme trending. From what i have seen, If a system works well in extreme trending, it struggles in the rest, and vice-versa. Add to that, extreme trending does not occur very frequently, and when it does, it is basically impossible to predict until a system is already locked into some major DD. At that point, the question is always, how far will this market run before it consolidates, and after consolidation...will it continue?
I would say this is a general guideline for systems and the target investors who would be interested in using them.
#1- small investors want massive gains (> 20%/month), and they are willing to deal with huge DD for immense gain.
#2-medium investors want a reasonable gain (>5%/month), and they want no DD.
#3-large investors want a guaranteed gain (amount doesn't matter), and they understand that a system sometimes requires open DD, but they want to KNOW, in the end they will be gaining equity.
What has the strategy been tested in?
- Long term, private account? No good for investors.
Long term 99% accurate historical data.....then it depends on the system type.
- Does it use a small stoploss??? No good for investors.
- What types of markets does it deal well with? Tight ranging, wide ranging, whipsawing, moderate trending(<600 pips without major pullback), extreme trending(>600 pips without major pullback), unexpected news breaks, sideways-drifting, trend-drifting. Really, the only market-type that is incompatible with the group is extreme trending. From what i have seen, If a system works well in extreme trending, it struggles in the rest, and vice-versa. Add to that, extreme trending does not occur very frequently, and when it does, it is basically impossible to predict until a system is already locked into some major DD. At that point, the question is always, how far will this market run before it consolidates, and after consolidation...will it continue?
I would say this is a general guideline for systems and the target investors who would be interested in using them.
#1- small investors want massive gains (> 20%/month), and they are willing to deal with huge DD for immense gain.
#2-medium investors want a reasonable gain (>5%/month), and they want no DD.
#3-large investors want a guaranteed gain (amount doesn't matter), and they understand that a system sometimes requires open DD, but they want to KNOW, in the end they will be gaining equity.
Make losses, but always come out a winner at the end.
