What is the best strategy if account is going maximum drawdown - page 2

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When you're hitting maximum drawdown, the first thing is to stop adding new positions and take a hard look at what went wrong. I've been there myself and the temptation is always to try and trade your way out of it, but that usually just digs the hole deeper. 

The best approach is to either close everything and reassess your strategy completely, or if you're confident in your system, reduce your position sizes dramatically and wait for the market conditions that favor your approach to return. Sometimes a drawdown is just bad luck with timing, but more often it's telling you something important about your risk management or market analysis that needs fixing.

 
Either cut your losses or try to hedge it by adding counter positions.
 
Lee See Hao #:
Either cut your losses or try to hedge it by adding counter positions.

I would only add that it's better to slant hedge in another market or at least in another instrument. In this way, you can potentially profit from a future divergence in prices.

In contrast, directly hedging within the same instrument runs the risk of you being "married" to a trade for an extended period of time─and in the FX market, swaps accumulate because long swap seldom equals short swap.

 
Victor Paul Hamilton #:
You don't have the balls...
Hey now. That's no way to speak. Let's be gender neutral and say, "You don't have the gonads..." No one's immune from danger.
 

<The paragraph discussing market products was removed by the moderator>

And about your positions, I think they are gone now, unless you been lucky at last minute before a stop out trigger. I think you got many replies that can help but the thing no one told you, not just position resizing but you should resize and immediately make a hedge to freeze the account then add some funds to cover any midnight spread spikes because it can liquidate both and get your account to zero in seconds, then and this is the most important and no one even asked you, what was your position? Gold? Bitcoin? FX? USD pairs? based on it you have to check if USD for example what is your direction long or short and what is pushing you to stop out, Dollar index? dollar getting in a good position, bad position? look when it is a good time and confirm if with indicators and other sources to stop the hedge and make some money from the hedged trade that will increase your margin and hedge again ( only make it when 100% sure) or just keep the hedge and wait the time this pair looks like losing the momentum, at this point you can liquidate the hedge position and go with the right direction.

Hedge and look for a confimed momentum shift.

 
First, reduce your risk.  One of my most valuable lessons is the importance of diversifying income. Relying solely on trading creates unnecessary pressure; having multiple revenue streams reduces stress and allows for better decision-making in the markets.
 
best strategy 
1. Increase the balance
2. Close the trade with the biggest loss.
3. Close all trades and rest.
 
Bambang Christianto #:
best strategy 
1. Increase the balance
2. Close the trade with the biggest loss.
3. Close all trades and rest.

"What is the best strategy if [the] account is going [into] maximum drawdown[?]"

Bambang Christianto #:
1. Increase the balance...
Do not throw good money after bad. If you do it once, you'll do it again and this a dangerous path to go down.
 
Pawan Kumar Sharma:
If account is going maximum drawdown then what is the best idea to short out this panic situation as well as what is next step to do for continue in market. 
If your account is already in maximum drawdown, then stop trading. The "best strategy" is NOT to double down, not to revenge trade, and definitely not to start guessing the market.

That's how accounts go from bad… to zero.

At that point, the market is not your enemy. Your own decisions are.

The correct mindset shift is simple:
you are no longer "trading for profit" - you are "trading for control."

First step is exactly what you said, but let's make it sharper:

STOP.

Not emotionally. Not temporarily. Completely pause live trading.

Because if you are already in max drawdown, your system is either:
• broken in current market conditions
• over-leveraged
• poorly risk managed
• or fundamentally not robust

And you cannot fix that while actively bleeding.

Then you do something most traders refuse to do:
you go into full post-mortem mode.

No emotions. No hope. No "maybe it will recover."

You analyze:
• where drawdown started
• what type of market broke the system
• was risk per trade too high
• did position sizing expand exposure too aggressively
• was there correlation stacking you ignored
• was volatility underestimated

Now here’s the hard truth most people avoid:

If a system cannot survive drawdown, it was never a real system - just a lucky curve.

Next step depends on what you find:

If risk is broken -) reduce it immediately or kill the strategy
If logic is broken -) stop trading it completely
If conditions changed -) step aside until market fits again
If everything is fine but exposure is too high -) rebuild sizing model

But the biggest mistake traders make is this:
they try to "trade their way out" of drawdown.

That is how small losses become account-ending losses.

Professionals traders do something very boring on the surface, mechanical in execution, but extremely powerful underneath:

they protect capital first, then think about recovery later.

Because in trading, survival is the only thing that keeps you in the game long enough to recover anything at all.

 

First, you should take a few minutes to reflect. If you lost a lot, wait until the next day and don't try to retaliate against the market. Wait for the market to stabilize and take a clear direction. You could use indicators to build a solid foundation and read the news to understand which direction the chart will take. Avoid entering during highly volatile periods or at the New York opening, for example. You should wait for the big players to withdraw and the noise to subside.

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