What is drawdown success in terms of growth and volatility? | Forex Factory

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What is drawdown success in terms of growth and volatility?

  • #1
  • First Post: Jan 16, 2009 5:47pm Jan 16, 2009 5:47pm
If your account experiences drawdown of x%, do you only consider it reasonable drawdown if your account can grow x% just as quickly?

I'll put it in terms of numbers:

I have an account worth $1000.

It experiences 20% drawdown in a month and is now at $800.

The account continues to run and increases by 20% to $1200, but it takes 4 months to get there.

Do you consider this system a failure as the drawdown occurs quicker and the growth is slower, but presumably more consistent?
  • #2
  • Jan 16, 2009 5:58pm Jan 16, 2009 5:58pm
I dont think there is enough Info here to come to a conclusion.
Living the adventure in my head.
  • #3
  • Jan 16, 2009 6:04pm Jan 16, 2009 6:04pm
What info do you think is missing that is needed?
  • #4
  • Jan 16, 2009 6:16pm Jan 16, 2009 6:16pm
Well, when did the account grow from $800 to $1000?

(I realise youve just changed that part, but it still is not clear)

At the end of the day, any system that can give you more profit than loss is worth your time, simple as that.
Living the adventure in my head.
  • #5
  • Jan 16, 2009 6:25pm Jan 16, 2009 6:25pm
If you are saying it takes 1 month to loose $200, and 4 months to make $400....

1000(deposit)
800 (End of month 1)
1200 (End of month 5)
1000 (end of month 6)
1400 (end of month 10)
1200 (end of month 11)
1600 (end of month 15)
ect....

That is a profitable method.

Is that the kind of thing you are talking about? Obviously the numbers wouldnt play out like that in real time, lol.
Living the adventure in my head.
  • #6
  • Jan 16, 2009 6:36pm Jan 16, 2009 6:36pm
Sure.

Basically I'm asking what you guys would think of my system. It's a scalping system that made 1100 trades this week between two currencies. It experienced 16% drawdown, but at the end of the week it is up around 1.5% on the week. The losses can come quick and hard, but it will ultimately recoup the losses and get back on track with slow steady growth.

The system will never grow as fast and to the degree that it can lose in a period of time. It will never have a week of 2% drawdown and 20% growth. It takes very small bites.
  • #7
  • Jan 16, 2009 8:24pm Jan 16, 2009 8:24pm
Sounds dangerous to me. 16% drawdown to me is BAD, if you come out with a win your are lucky THIS TIME, but one bad week and it will take what..a month to makeup..with even less margin to work with this time. I know from experience..now, I'm all about letting profits RUN and cutting losses.
  • #8
  • Jan 16, 2009 8:31pm Jan 16, 2009 8:31pm
Quoting Petefaders
Sounds dangerous to me. 16% drawdown to me is BAD, if you come out with a win your are lucky THIS TIME, but one bad week and it will take what..a month to makeup..with even less margin to work with this time. I know from experience..now I'm all about letting profits RUN and cutting losses.
Drawdown is relative to risk, more risk taken, more profit is possible. Ultimately you need an edge though, this sounds like it could blow up.

How many of the trades were wins?
Living the adventure in my head.
  • #9
  • Jan 16, 2009 8:41pm Jan 16, 2009 8:41pm
Quoting Leonlorenzo
Drawdown is relative to risk, more risk taken, more profit is possible. Ultimately you need an edge though, this sounds like it could blow up.

How many of the trades were wins?
You mean "Blow up" as in blow the acount?
anyway, I'm talking about trading larger time frames daily,4hr,1hr using gann.
That means I am trading with the larger trend, so I will always leave at least one of the original 5 postions to catch the trend untill it reverses..that one position gives anywhere from 200 to 800 pips on G/J. at leat once a week, using gann.

the other 4 positions have a tp and stop loss of ..lets say:
40,60,90,125 pips, with a simliar stop loss as the tp.
  • #10
  • Jan 16, 2009 8:44pm Jan 16, 2009 8:44pm
Quoting Petefaders
You mean "Blow up" as in blow the acount?.
Correct.
Living the adventure in my head.
  • #11
  • Jan 16, 2009 8:48pm Jan 16, 2009 8:48pm
Quoting Leonlorenzo
Drawdown is relative to risk, more risk taken, more profit is possible.
Higher risk does not need to be taken to get a higher profit.
  • #12
  • Jan 16, 2009 8:51pm Jan 16, 2009 8:51pm
Quoting Jimmy Jones
Higher risk does not need to be taken to get a higher profit.
It is the only way to increase profits without changing the method.
Living the adventure in my head.
  • #13
  • Jan 16, 2009 8:59pm Jan 16, 2009 8:59pm
Quoting Leonlorenzo
It is the only way to increase profits without changing the method.
to me, cutting losses at a resonable drawdown % everytime is a sign of disclipine, as is allowing wins to run when you can close now for pips, cause you system says stay in. I am finaly learing this. At the end of the week, that 600 pip runing trade will MORE than make up for losses in a 50/50 win loss ratio, yes?
also, I would have to be wrong MANY times to blow my account..not 4 or 5 times.
*are you trading an EA or someting?
  • #14
  • Last Post: Jan 17, 2009 12:19am Jan 17, 2009 12:19am
Quoting Leonlorenzo
Drawdown is relative to risk, more risk taken, more profit is possible. Ultimately you need an edge though, this sounds like it could blow up.

How many of the trades were wins?
Out of 1100 or so trades, it won around 47-48% of them, but because of position and TP sizes, did end up profiting. These were live demo trades.
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