Why do you limit the maximum drawdown on the account? - page 4
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If you allow a drawdown of, say, 20%, what are the other 80% of the account for? In this case, open an account with 20% of all funds and work on all. Trading with a max drawdown of 20% of the total amount available and trading with a drawdown of 100% of the total amount is one and the same.
I don't talk to anyone about it, but they all turn their heads. Maybe I don't understand?
It's about the trader, the same about the investor, invest 100% of funds that you are ready to lose. i.e. not 100 c.u. at a promised drawdown of 20%, but 20, at 100% drawdown.
What's so wild about it?
That is correct. If a system works long and stably with drawdown not exceeding 10% for example, it would be foolish not to increase the drawdown by several times if margin requirements allow, because money should either be spent or work, and not hang in the balance of brokerage companies for nothing.
That's right. If the system works long and stable with a drawdown not exceeding 10% for example... then not increasing the lot size several times, if the margin constraints allow, would be foolish, because money should either be spent or work, and not hang in waste on the DC's balance sheet.
Yes, but the investor, for the purposes of this question, needs to understand what he got more out of... By taking a bigger risk. Leo's answer does not imply that.
I don't get it. Let me rephrase:
1. I was driving down the motorway on a moped at 60 km/hour. The distance from my house to my summer house was 60km.
2. I was travelling along the motorway on a moped at 300 km/hour. The distance from my house to my summer house was 12 km.
Can you see the difference? No? Then imagine there's a brick on the motorway.
tosever32: I repeat - calculate the probability of drainage for your system in both cases. Your system is most likely non-linear in terms of drawdown.
jelizavettka:
You know what I mean? A strategic mistake by traders.
There's talk of profits...
But in addition to numerous and huge profits, losses may happen accidentally.
1. If as a result of one trade half of the account is lost (the drawdown is high) - the system is bad.
2) If as a result of 200 trades half of the account is lost (the drawdown is high) - the system is bad.
The essence of limiting the drawdown of N% of the account amount - is to timely notice that the system is bad and stop to correct it.
The account itself has nothing to do with a million or 100 quid - it is a personal matter.
It's no use explaining if you don't understand that trading 1 to 500 has substantially greater risks than 1 to 1.....)))
Really?
Such a Question.....
If I have 1/500 leverage. and, let's say, Vova's is 1/1.....
We have the same amount of money. ... we trade with the same system (for example) 0.1 lot.
Which of us takes more risks?
Who will be closer to Uncle Kolya?
The answer is Vovan. because Lisa still read the Necessary Margin fairy tale.
Using free leverage less than the maximum possible is stupid.
No one's forcing you to trade with the maximum lot)))))
That's right. If the system works long and stable with a drawdown not exceeding 10% for example ... then not to increase the lot size several times, if the margin restrictions allow it would be foolish, because money must either be spent, or work, but not hang in vain on the BC balance.
that's logical...:-))) it turns out that it's like military aircraft - five times the safety margin of all systems gives confidence in real-world combat conditions...
but what the fuck is the need for such confidence in the forex ... don't like it, don't want to risk it... free niche must be covered by your order...:-))
2. I was travelling along the motorwayon a moped at 300 km/hour. The distance from my house to my summer house is 12 kilometres.
The point of limiting the drawdown to N% of the account amount is to notice in time that the system is bad and to stop to correct the deficiencies.