What do you consider an "acceptable" level of drawdown?

I'm trying to diversify and use small trading EA's on basically all currency pairs, to minimize my risk of catastrophe. I seem to be profitable, but have around 20% drawdown, even though I am up around 15% total in the last month. Yes, I realize not every month will be like that. I'm curious what everyone thinks an acceptable level of drawdown is. And ultimately, if I am profitable, does it even matter? Thanks for your input.

It depends on what you're comfortable with and it also depends on your backtesting.
If you look at your backtesting and your maximum drawdown was 10% but you're at 13% in your live trading something could be wrong.

Now when you calculate your lot sizing you should have assigned a maximum allowable drawdown meaning you trade at a lot size that would keep you within that amount if you hit another one of those maximum drawdowns and any time you go over that amount or are drifting close to it you should review your trading more than you would otherwise since you might be executing your strategy wrong or maybe your strategy itself is failing and needs to be re adjusted.

Now for the comfortable part of this answer I have a couple of things to say.
You need to be comfortable with the maximum allowable drawdown.
Some people are comfortable with 5% others with 10% and others with 25% but keep in mind that the more drawdown you allow the harder it will be to get out of that drawdown.
Usually people with a small account tend to risk more because they need to build up their account but they still need to be comfortable with the amount that they're risking or they'll make mistakes and revenge trade and such and then it's a big mess.

I personally allow for 25% drawdown at the moment (which I have never hit in my year and 3 months of live trading so far) and this allows me to trade at a higher lot size and make bigger returns. I personally would never go over 25% allowable drawdown.

Does it matter if you're profitable?
Yes it matters, significant drawdown can be the sign that something is wrong.


I hope that helps a bit.
-AntiVi

"does it even matter?"
no. not at all. your maximum drawdown ultimately matter to no one but you!

I'm not sure how to say this but here goes..... from my understanding, drawdown is an indicator of measuring the downside risk over a specified time period. The higher your your DD every month, the higher chances of losing your account. When your DD is high each month there is a chances your account might explode to smithereens the next few month. So its better to learn how to control the DD lower. Less than 25% DD would be nice though but yeah as profitfarmer said your maximum drawdown ultimately matter to no one but you!.