Drawdown Question

forex_trader_258361

Členom od Jun 23, 2015 2 príspevkov

Mar 06, 2016 at 08:26

Členom od Jun 23, 2015 2 príspevkov

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

Členom od Jan 22, 2011 18 príspevkov

Mar 09, 2016 at 17:53

Členom od Jan 22, 2011 18 príspevkov

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

Členom od Jun 23, 2015 2 príspevkov

Mar 10, 2016 at 07:15

Členom od Jun 23, 2015 2 príspevkov

Thank you.

forex_trader_280558

Členom od Oct 16, 2015 2 príspevkov

Mar 15, 2016 at 10:57

Členom od Oct 16, 2015 2 príspevkov

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.

togr

Členom od Feb 22, 2011 4573 príspevkov

Mar 15, 2016 at 12:07

Členom od Feb 22, 2011 4573 príspevkov

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

Členom od Oct 16, 2015 2 príspevkov

Mar 15, 2016 at 13:13

Členom od Oct 16, 2015 2 príspevkov

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

Členom od Sep 20, 2014 342 príspevkov

Mar 15, 2016 at 17:09

Členom od Sep 20, 2014 342 príspevkov

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.

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