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Reasonable Drawdown to Monthly Gain

rob559
Sep 11 2013 at 17:48
posts 1916
falcon333 posted:
Scott, it is absurd to imply that one should never have a DD on your account. All traders and systems have DD -- and it does not have to occur at the month end, it can occur intermonth. Moreover, 7 years trading without one negative month is such an extreme statement that needs backup, like a direction stats connection to your MT4 account. Otherwise it is BS.

there is a difference between dd and floating dd,agree with you,both are normal for a trader
mmuller
Sep 13 2013 at 13:31
posts 26
I think that historically below 10% DD has been associated with below 10% annual gains. I.e. there has been no multiyear verified track-record of anyone that would have very small DD% and still annual gains of over 30%. Since Myfxbook accounts are typically small and less than 6 months old, the gains there can not be compared to famous fund managers for example.

I currently trade my own money only, but I plan to offer managed accounts soon also. Target audience for those accounts should be satisfied with annual returns of 15%-20% a year or about twice the return than public nowadays expect from holding e.g. a stock-mutual-fund.

I adjust risk to keep my DD below 15%. I use money management rules that reduce the risk if this limit is nearing. That also limits my profit potential at DD-periods, but that is the price that has to be paid to preserve capital for future winning streaks.

I'm very satisfied to my current 11 month gain of 75%+ and max DD. 10.72%, If I can keep that DD for years, even if my annual gains would be halved it would be better than most of us can hope for on the long-run.

What is also important is the longest drawdown period. That is currently 11 weeks for me, and I'm not very happy with that.
My trading style allows for prolonged drawdowns. I don't have any specific goal there. What would be investor expectations there? It depends so much on their investment horizon and the timing when they jump in to a fund/managed-account...

-Mika
Jeremy Foo (darkdome)
Sep 14 2013 at 14:05
posts 11
mmuller posted:
I think that historically below 10% DD has been associated with below 10% annual gains. I.e. there has been no multiyear verified track-record of anyone that would have very small DD% and still annual gains of over 30%. Since Myfxbook accounts are typically small and less than 6 months old, the gains there can not be compared to famous fund managers for example.

I currently trade my own money only, but I plan to offer managed accounts soon also. Target audience for those accounts should be satisfied with annual returns of 15%-20% a year or about twice the return than public nowadays expect from holding e.g. a stock-mutual-fund.

I adjust risk to keep my DD below 15%. I use money management rules that reduce the risk if this limit is nearing. That also limits my profit potential at DD-periods, but that is the price that has to be paid to preserve capital for future winning streaks.

I'm very satisfied to my current 11 month gain of 75%+ and max DD. 10.72%, If I can keep that DD for years, even if my annual gains would be halved it would be better than most of us can hope for on the long-run.

What is also important is the longest drawdown period. That is currently 11 weeks for me, and I'm not very happy with that.
My trading style allows for prolonged drawdowns. I don't have any specific goal there. What would be investor expectations there? It depends so much on their investment horizon and the timing when they jump in to a fund/managed-account...

-Mika

By far what you have just said since i started this post..your post has given me the most satisfying answer :) thanks!
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’
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