Why do you limit the maximum drawdown on the account? - page 2
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Add collateral funds for high leverage, it doesn't change the essence of the topic.
The question is, what does the trader need the rest of his account for when he reaches max drawdown?
By investing more money in the management, the investor gets a bigger share, thus getting a bigger profit in case of profit.
By limiting the loss, the investor insures his risks.
Of course, if you trade with 1 to 1 leverage, an investor may entrust you with 100% of the invested funds.
By increasing the leverage, an investor can limit his losses, in order not to get burnt in one day )))).
If you have a max. drawdown of 20%, what do you need the other 80% of your funds for?
P.S. We are talking about forex leverage. or more simply, do not take into account the collateral at all.
If you have a max. drawdown of 20%, why do you need the remaining 80%?
By the way, it wasn't clear to me either. If I want to limit my risk to a certain amount, why would I want to place a larger amount in a brokerage company?
In essence, an investor is the same as a trader.
A trader, opening a $300 deposit, for some reason wants to trade 1 lot, in order to get the maximum possible profit and almost the minimum loss of $300, in the case of a loss, using the leverage of DC 1 to 500.
An investor does not have such leverage, that is why investing a bigger amount in PAMM, he wants to gain the biggest possible profit and at the same time he wants to limit his losses.
What is not clear about it? ))))
1. By investing more money in management, the investor gets a bigger share, thus getting a bigger profit in case of a profit.
2. by limiting the loss - the investor insures his risks.
3. Of course if you are trading with 1 to 1 leverage, an investor can trust you with 100% of the invested funds.
By increasing the leverage, an investor can limit his losses in order not to get burnt in one day )))).
1 and 2 are in contradiction. this is what traders and investors live with.
3. we are not talking about leverage. this is another topic; I, for example, do not understand the difference for my trading between 1/1 and 1/500.
The question is why the trader needs the remaining funds in his account when he reaches a max. drawdown + a deposit.
The question is, what is the remaining account balance for when a trader reaches max drawdown + collateral?
1 and 2 are in contradiction. this is what traders and investors live with.
3. we are not talking about leverage. this is another topic, for example, I do not understand the difference between 1/1 and 1/500 for my trading.
He who does not hear, let him hear.....)))
It is useless to explain if there is no understanding that trading 1 to 500 has significantly greater risks than 1 to 1.....)))
i'm not a cool guy, but i haven't lost any money in a year and a half, even though i have 100% of my money in it. although that's not an indicator, and there are a lot of variables.
As for the maximal drawdown, it's not the point. it's an incomprehensible shit, where traders during testing look for maximal profit of the whole depo amount and limit the drawdown to a specific size of the depo, thereby voluntarily storing a bigger part of the deposit and hoping for higher profit that exceeds the risk capital.
I haven't lost an account in a year either), but if I hadn't had a reserve, and I had been spending all my deposits on a barrel, I would have met Uncle Kolya in about 1-2 months or sooner.
For me limiting the drawdown to a specific figure is a purely individual self-assessment of one's abilities or the trading system possibilities.
The drawdown tolerance as one of technical criteria of a system "goodness" is a kind of convention.
Do you use SL? What is its value? If so, the drawdown tolerance is around here somewhere.
If you don't use it, you are a real badass (in the sense of a 99% confident professional))).
If the system has a percentage of winning trades, you need more money for profitable trades. That is, you need a 100% system for 100% utilisation.
When working in real life, we are obliged by default to take our TS for 100%, like athletes or football teams. i can't imagine that they can expect to win by putting in 20%.
It's no use explaining if you don't understand that trading 1 to 500 has substantially greater risks than 1 to 1.....)))
you are wrong and very wrong.
I won't argue as I'm lazy, no energy and in the end - useless....))