Preventing drawdowns

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Hey everyone,

Need ideas on how to prevent drawdowns. Want to maximize profits and keep my trading capital.

Please share ideas

 
Mark Olusope Olowookere:

Hey everyone,

Need ideas on how to prevent drawdowns. Want to maximize profits and keep my trading capital.

Please share ideas

Drawdown is part of trading, you goal should be to minimize it, while maximizing return.

A good risk/reward ratio along with the use of stop loss can help minimize it, in order to avoid getting trapped into long time deep drawdowns.

 
Eleni Anna Branou:

Drawdown is part of trading, you goal should be to minimize it, while maximizing return.

A good risk/reward ratio along with the use of stop loss can help minimize it, in order to avoid getting trapped into long time deep drawdowns.

Hey Eleni,

Thanks. Initially i thought a strategy to prevent draw downs is to fund my account with a huge sum and not use stop loss.

For as long as the chart is moving on the opposite side of my trade order, 1 day it will move the side that bring in profit.

Is that wise?

 
The no stop loss strategy is called Buy and Hold. You don't want to do that using leverage.
 
Mark Olusope Olowookere:

Hey Eleni,

Thanks. Initially i thought a strategy to prevent draw downs is to fund my account with a huge sum and not use stop loss.

For as long as the chart is moving on the opposite side of my trade order, 1 day it will move the side that bring in profit.

Is that wise?

If you have a very large account trading with small positions, in order to minimize drawdowns, you will decrease at the same time your potential for good profit.

Not using stop loss is a hold and pray strategy and at some point will fail.

 
Aquagem:
The no stop loss strategy is called Buy and Hold. You don't want to do that using leverage.

Have being using the strategy on demo that's why i thought it can work on live account.

Thanks for sharing the detail.  

 
Eleni Anna Branou:

If you have a very large account trading with small positions, in order to minimize drawdowns, you will decrease at the same time your potential for good profit.

Not using stop loss is a hold and pray strategy and at some point will fail

can't afford to lose money on a hold and pray strategy. will implement stop loss then

 
Mark Olusope Olowookere:

Hey everyone,

Need ideas on how to prevent drawdowns. Want to maximize profits and keep my trading capital.

Please share ideas

Trade without leverage or use lowest leverage , only it can fix your issue 

 
Eleni Anna Branou:

If you have a very large account trading with small positions, in order to minimize drawdowns, you will decrease at the same time your potential for good profit.

Not using stop loss is a hold and pray strategy and at some point will fail.

I understand what you are saying. I don't stand to make substantial profit when trading small positions on a large account using the hold and pray strategy.

If I also trade big positions on the large account with the hold and pray strategy, the chance of losing all my money is high
 

The only way to minimize draw-down is to accept your losses (close losing positions) when they are still small. The alternative is called gambling and rarely works out.

 
Mark Olusope Olowookere:

Hey everyone,

Need ideas on how to prevent drawdowns. Want to maximize profits and keep my trading capital.

Please share ideas

Hi, you can use several strategies with low correlation, this strategy portfolio is less sensitive to value drops DD. Regards Greg

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