Rhetorical question
What percentage of equity drawdown is considered safe!
I don't think a 100% drawdown is safe.
Why? Imagine you have several accounts.
When talking about the drawdown on an account, they almost never specify what the balance on that account is -- is it all the money allocated for trading or is it part of it.
If these points are specified, then the relation to "drawdown" changes, and so does the understanding of "acceptable drawdown".
For example, martingale-type strategies -- for them a 100% drawdown is acceptable.
It's all money to trade
Then read the classics of money management - they talk about a couple of percent load on the deposit.
Again, you have to understand what the drawdown is, whether it is from the initial starting balance or the current balance.
"from the initial starting balance or from the current balance"
from the initial.... but here as it every time the initial (every day) remains $ 1000 and all profits are withdrawn (every day) that's the question and either do not withdraw and leave or still withdraw every day profits."from the initial starting balance or from the current balance"
from the initial.... But here's how it each time the initial (every day) remains $ 1000 and all profits are withdrawn (every day) that's the question and either do not withdraw and leave or still withdraw each day's profits.Better to withdraw. To protect yourself from unforeseen situations. On the other hand, with increasing your balance - you can increase the lot size of the transactions - and correspondingly your profit
What percentage of equity drawdown is considered safe!
There are many systems for which there is an indefinable drawdown. let's say if the depo is $50,000-$100,000 and the trading volume is 0.01, this is in fact an unacceptable drawdown for the system. Usually with such a deposit drawdown will koobalyatsya within 1-7%.Pri average earnings of 10-15% per month ...
But since hardly anyone can afford (from simple traders) such a deposit, we take the easiest $1000.
So with such a deposit what percentage drawdown is objectively dangerous?
Now I'm testing my system ... I can start with $1000, but I need to assess risks ...
Here are my preliminary results
Profitability averaged 5-10% per day this has shown trade since the beginning of the year
Maximum drawdown was 26% of $ 1000 (excluding profitable trades) is profit taken every day, and the account 1000 remain every day. And this is only drawdown, with this drawdown trade closed in + $ 78.
Here I think either not to withdraw every day and withdraw once every 2 weeks.
Or start not with 1000 but with 2000 or 3000 $. But I need time ... with a depot of 10000 $ when trading 0.01 drawdown is just not acceptable....
Write what anyone thinks ...
Writing, I think finally found the grail!!! We leave profit of 5% in the depo, the rest on the girls, then it turns out by the end of the year
| Profit percent in day, %. | 5 |
| Start deposit, $ | 1000 |
| Trade days in month | 20 |
| Month for trade | 6 |
| Trade days all | 120 |
| Profit end, $ | 348911,98 |
Leaving a profit of 5% in the depo, the rest for the girls.
Which ones?
It's all trading money
I can't say about the safe, but you can speculate about the maximum.
If this is all the money to trade, it means that there is nothing to cover, and in that case:
(P - Y) / (P + Y) * 100% - maximal drawdown, after that the amount of deals should be reduced by the drawdown value, to return the risk back to its nominal value. This is a forced measure to guarantee the avoidance of losing.
Where P - profit (cumulative for the period), Y - loss (cumulative for the same period)
Since P/U = Pf is the profit factor, we can express the same through: (Pf - 1) / (Pf + 1) * 100%.
Np, the maximum permissible drawdown:
if you are trading with Pf = 2, then (2 - 1) / (2 + 1) * 100% = 33%
if you trade with Pf=1.5, then (1.5 - 1) / (1.5 + 1) * 100% = 20%.
if you trade with Pf = 3, then (3 - 1) / (3 + 1) * 100% = 50%.
As you go out of the drawdown, you can gradually add the traded volume, and the rule for the maximum drawdown is the same. In other words, we cannot decrease the traded volume at once (simultaneously) by more than this calculated value to avoid sinking, but it (decrease of volume) needs to be done to avoid (guaranteed) sinking as well.
Naturally, this assurance is conditional, because it is tied to Pf, which is a variable value, the variability of which depends on the duration of the calculation period and other factors. Therefore, some risk is still present. But this value (I do not know how to call it better) can serve as a reference point for trading aggressiveness. It is like a certain threshold not to be crossed, telling us up to what level we can afford not to consider real losses as such, considering it as a drawdown. After all, the bigger the Drawdown, the more aggressive our trading actually becomes, because the traded volume remains at its original level, and the available funds are reduced.
Here we have two sides. On the one hand, as it was already said, up to what estimated value we are not going to admit the loss, increasing aggressiveness of trading, on the other hand, to what extent we will recognize (simultaneously) this calculated threshold value when it is reached: 100%, 50%, ..., reducing this same aggressiveness, because under the condition we have nothing to refill. If we admit all 100% at once, it is one thing, and if it is less, say 50%, then we have to strike a balance.
The same reasoning, I think, is true for reinvestment, because they are essentially two sides of the same coin.
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What percentage of equity drawdown is considered safe!
There are many systems for which there is an indefinable drawdown. let's say if the depo is $50,000-$100,000 and the trading volume is 0.01, this is in fact an unacceptable drawdown for the system. Usually with such a deposit drawdown will koobalyatsya within 1-7%.Pri average earnings of 10-15% per month ...
But since hardly anyone can afford (from simple traders) such a deposit, we take the easiest $1000.
So with such a deposit what percentage drawdown is objectively dangerous?
Now I'm testing my system ... I can start with $1000, but I need to assess risks ...
Here are my preliminary results
Profitability averaged 5-10% per day this has shown trade since the beginning of the year
Maximum drawdown was 26% of $ 1000 (excluding profitable trades) is profit taken every day, and the account 1000 remain every day. And this is only drawdown, with this drawdown trade closed in + $ 78.
Here I think either not to withdraw every day and withdraw once every 2 weeks.
Or start not with 1000 but with 2000 or 3000 $. But I need time ... with a depot of 10000 $ when trading 0.01 drawdown is just not feasible....
If you write your thoughts ...