Why do you limit the maximum drawdown on the account? - page 5
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If the trader is willing to risk a part of some amount, then what prevents the trader from keeping exactly this part and no more in the DC?
Nothing.
It's personal.
Whoever is comfortable or fancied.
If you lose money, you can always promptly borrow a couple of million from a friend and stick it in the furnace (account).
I feel uncomfortable in front of my friend...)))
If a trader is willing to risk a part of a certain amount, what prevents the trader from keeping exactly that part in the DC, and no more?
probably just the response time of the system for deposits and withdrawals...
(If I had the ability to instantly add to save the deposit, it would be a very different picture...)
Nothing.
It's personal.
Whoever is comfortable or fancied.
If you lose money, you can always promptly borrow a couple of million from a friend there.
I'm not comfortable. In front of a friend...)))
There is a nuance here: the manager determines the value of the maximum drawdown, and the investor can only believe in this and invest according to their faith in the manager. I.e., if the manager says about 20% of maximal drawdown and the investor is ready to risk $200 and trusts the manager, it makes sense to invest in PAMM 1000. Investment in this PAMM 200 will give 5 times less profit, but losses will not add up to $40. What is the sense of investing $200 in the PAMM described above if the investor is ready to risk 2 hundreds? But of course this is if the manager will not cheat.
I honestly don't get it.
probably just the response time of the system for deposits and withdrawals...
(if I had the ability to add instantly to save the deposit, it would be a very different picture...)
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.
Oh, yeah?
Such a question.....
If my leverage is 1/500. and, let's say, Vova's is 1/1.....
We have the same amount of money ..., we trade on the same system (for example) 0.1 lot.
Which of us takes more risks?
It's about leverage.
Having a deposit of 10k and working with 0.1 lot - leverage 1 to 1.
And having a $100 deposit and working with 0.1 lot - 1 to 100 leverage.
All calculations are approximate - too lazy to count with the current rate )))).
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.
As for the account itself, it does not matter whether there is a million or 100 quid - it is a personal matter.
You calculate profitability from the whole account (100%), but you determine the soundness of the system with a 50% drawdown. 100% and 50%. disproportion, eh?
Oh, yeah?
Such a question.....
If my leverage is 1/500. and, let's say, Vova's is 1/1.....
We have the same amount of money ..., we trade on 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 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 Lisa, the shoulder, that's a separate story.
yes, but the investor, for the purposes of this question, must understand what he got more for... by taking a bigger risk. Leo's answer does not imply that.
The investor understands at the expense of what. Which of these?
Why can't an investor limit his losses?
A trader can? - He can.
And why can't the investor?