Max DD for 20% increase?
You may want to use the good old R:R ratio to come up with your answer on this one. The application is universal, so I don't see why it would not apply here. Example:
Let's say you are a trader that usually works with a 1:1 ratio. The conclusion in this case is that you may (or would be willing to) risk a 20% DD.
If you're one of those guys that attempts to work with the "popular" 3:1 ratio, a DD of 6% o 7% would be expected.
Make sense?
You may want to use the good old R:R ratio to come up with your answer on this one. The application is universal, so I don't see why it would not apply here. Example:
Let's say you are a trader that usually works with a 1:1 ratio. The conclusion in this case is that you may (or would be willing to) risk a 20% DD.
If you're one of those guys that attempts to work with the "popular" 3:1 ratio, a DD of 6% o 7% would be expected.
Make sense?Thanks Mr.Marketz, in my opinion you are a highly respected member on this forum, as are most senior members. I tend to go with the 1:1 ratio, it's not for everyone, not many people like to see that big of a negative floating balance.
Thanks Mr.Marketz, in my opinion you are a highly respected member on this forum, as are most senior members. I tend to go with the 1:1 ratio, it's not for everyone, not many people like to see that big of a negative floating balance.
Nothing wrong with 1:1, J. As long as you're clearing 6 out of 10 trades on average. Given SL and TP levels being equal on all 10 trades. "Do yo dizzle fo shizzle"...(I figured since you were a younger guy, I would try to impress you with my street lingo)... Did it work? 
Nothing wrong with 1:1, J. As long as you're clearing 6 out of 10 trades on average. Given SL and TP levels being equal on all 10 trades. "Do yo dizzle fo shizzle"...(I figured since you were a younger guy, I would try to impress you with my street lingo)... Did it work?
Lol, yes, I'm impressed. This week I'm 9 for 12, so i guess I'm ok for now!
I'm asking this as a general survey to see what kind of DD you would REALISTICALLY accept to gain 20% a week. (Realistic is the keyword there!) Just curious. Thanks! (No I'm not making 20% a week, just a question)
If you make 20% profit per week it means that you are way over-leveraged.
And that you have a very high chance of burning your account.
20%/week X 52 weeks = 1.040%/year.
A good robust and profitable system will produce a R/R ratio between 4 and 6.
Means that your profit will be 4 to 6 times as big as your MaxDD.
That means if one makes 1000% profit/year that he will encounter MaxDD of 250% to 166%.
That means if you start of with a leverage that can make these kind of profits and you encounter the MaxDD the moment you start to trade, you'll burn your account very quickly....
Regards...iGoR
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I'm asking this as a general survey to see what kind of DD you would REALISTICALLY accept to gain 20% a week. (Realistic is the keyword there!) Just curious. Thanks! (No I'm not making 20% a week, just a question)