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Drawdown Question
Mar 06, 2016 at 08:26
Vues 909
6 Replies
forex_trader_258361
Membre depuis Jun 23, 2015
posts 2
Mar 06, 2016 at 08:26
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
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
Membre depuis Jan 22, 2011
posts 18
Mar 09, 2016 at 17:53
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.
forex_trader_258361
Membre depuis Jun 23, 2015
posts 2
Mar 10, 2016 at 07:15
Thank you.
forex_trader_280558
Membre depuis Oct 16, 2015
posts 2
Mar 15, 2016 at 10:57
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.
This way people can see how you have improved over time and that your strategy is durable.
Membre depuis Feb 22, 2011
posts 4573
Mar 15, 2016 at 12:07
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.
forex_trader_280558
Membre depuis Oct 16, 2015
posts 2
Mar 15, 2016 at 13:13
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.
Mar 15, 2016 at 17:09
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.
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.
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