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Account Drawdown Help

  • #1
  • First Post: Apr 25, 2016 8:56am Apr 25, 2016 8:56am
Hey guys,

I could use some help

I'm not sure if I am risking too much or too little per trade and I could use your help determining what I should expect my maximum draw down to be with my current trading strategy?
Past performance has been a 50% win/loss rate with:

2.475% gain on the win side
&
2.145% loss on the bad trades

Appreciate your help
  • #2
  • Apr 25, 2016 9:09am Apr 25, 2016 9:09am
Quoting newyear498
Hey guys, I could use some help I'm not sure if I am risking too much or too little per trade and I could use your help determining what I should expect my maximum draw down to be with my current trading strategy? Past performance has been a 50% win/loss rate with: 2.475% gain on the win side & 2.145% loss on the bad trades Appreciate your help
Obviously this ratio will not get you far.. With a 50% win/loss ratio, your gain needs to be double your loss, as not only will it be impossible to get ahead, but it will also destroy you psychologically. My advice to you is simple. Keep working on your strategy so that you achieve a better win/loss ratio, as 50% is okay provided your % pip gain exceeds your loss by at least 2:1, but anything above 50% is better. In short, you are risking too much and gaining too little.

Solution - Aim for a 3:1 risk ie, 10 pip SL for 30 pip TP, and work hard at improving your 50% win/loss ratio.
  • #3
  • Apr 25, 2016 10:17am Apr 25, 2016 10:17am
Quoting cat
{quote} Obviously this ratio will not get you far.. With a 50% win/loss ratio, your gain needs to be double your loss, as not only will it be impossible to get ahead, but it will also destroy you psychologically. My advice to you is simple. Keep working on your strategy so that you achieve a better win/loss ratio, as 50% is okay provided your % pip gain exceeds your loss by at least 2:1, but anything above 50% is better. In short, you are risking too much and gaining too little. Solution - Aim for a 3:1 risk ie, 10 pip SL for 30 pip TP, and work...
But what is the expected draw down? thats the question

I want to be able to handle a significant amount of consecutive loses.. I presume 30 consecutive loses is very realistic at some point etc.. looking for an optimal risk per trade as in % of account risked.

I'm not talking theory here.. ofcourse I risk 2:1 or 3:1 or more.. it depends on the market.. what I'm talking are hard numbers over past 2 years of trading when you look at the average trade
  • #4
  • Apr 25, 2016 10:22am Apr 25, 2016 10:22am
Quoting newyear498
{quote} But what is the expected draw down? thats the question I want to be able to handle a significant amount of consecutive loses.. I presume 30 consecutive loses is very realistic at some point etc.. looking for an optimal risk per trade as in % of account risked. I'm not talking theory here.. ofcourse I risk 2:1 or 3:1 or more.. it depends on the market.. what I'm talking are hard numbers over past 2 years of trading when you look at the average trade
I'm afraid I'm not on your wavelength, so cannot help you further. 30 consecutive losses realistic??? Are you joking!!
  • #5
  • Apr 25, 2016 10:29am Apr 25, 2016 10:29am
30 consecutive losses will put you out of business in a snap. Revise your strategy and actually replace it completely.
  • #6
  • Last Post: Apr 25, 2016 1:32pm Apr 25, 2016 1:32pm
Interesting replies.. but i think in the trading business it is very probable to have 30 consecutive loses.. especially with risk to rewards like 10 to 1 etc..

30 consecutive loses is always a chance.. anything is.. in fact its a 1 in a billion occurrence given my situation.. forgive me if I am preparing for the black swan.

Its no problem then I can just run a simulation, I figured someone would know the math though

Best,
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