There seems to be some sort of new FF hype lately centered on a “unique” principal of drawdown control. Apparently, a trader is required to increase their leverage in order to control their drawdown. I am referring to the so called “Pit Bull Method”, of course.
I want to make something perfectly clear here, and please note that this is not my opinion… this is mathematical certainty.
***Increasing leverage (i.e. buying more contracts) INCREASES drawdown, and not the other way around. This includes hedging &/or averaging positions. Period. ***
As a matter of fact, it should be so painfully obvious that I am appalled at the number of people preaching the contrary. Granted the majority of advocates come from a fresh batch of market participants, but still - you have to try to be sensible about certain things.
By the way, I am even more surprised that Brijon (a self-proclaimed 20 year market vet) has introduced this as an acceptable method of trading.
Mind-blowing.
I want to make something perfectly clear here, and please note that this is not my opinion… this is mathematical certainty.
***Increasing leverage (i.e. buying more contracts) INCREASES drawdown, and not the other way around. This includes hedging &/or averaging positions. Period. ***
As a matter of fact, it should be so painfully obvious that I am appalled at the number of people preaching the contrary. Granted the majority of advocates come from a fresh batch of market participants, but still - you have to try to be sensible about certain things.
By the way, I am even more surprised that Brijon (a self-proclaimed 20 year market vet) has introduced this as an acceptable method of trading.
Mind-blowing.