Biggest drawdown you have experienced turn into profit? | Forex Factory

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Biggest drawdown you have experienced turn into profit?

  • #1
  • First Post: Jul 21, 2010 1:19pm Jul 21, 2010 1:19pm
As I am learning the longer time frames, I have noticed draw downs start to become much larger. We all know it's impossible to predict tops/bottoms and why draw downs are necessary, even if one has mastered keeping them minimal.

I have been demo trading on the longer time frames, and as such, my entry points are rather horrid. This is something I will continue to work on... however for testing purposes I have let draw downs continue on to see how far they go back before I decide to close out the order. I am usually around 50-100 pips. On a live account I don't think I would ever stand for such a draw down, but when you are attacking these larger time frames what can one do?

What has been your biggest draw down that you have let run, to let it turn into profit? At what point do you normally abandon a position for a better position since you have gone to far negative as it is...?

Looking for thoughts, experience, nightmares that you all have experienced.
  • #2
  • Jul 21, 2010 3:11pm Jul 21, 2010 3:11pm
Quoting Venice
What has been your biggest draw down that you have let run, to let it turn into profit? At what point do you normally abandon a position for a better position since you have gone to far negative as it is...?

Looking for thoughts, experience, nightmares that you all have experienced.
Like most Traders I like to determin my risk first before I enter a Trade so my Drawdown will never be higher than my Stoploss. That's pretty much it.

Waiting for huge drawdowns to come back is not the best strategy if you want to have long term success.
  • #3
  • Jul 21, 2010 3:20pm Jul 21, 2010 3:20pm
Hi TJPLD, I do agree that is very much based on your accepted risk. Playing these longer term charts I have to accept a higher risk level, but the pay off is of greater value.

More testing to go under way here...
  • #4
  • Jul 21, 2010 4:24pm Jul 21, 2010 4:24pm
Quoting Venice
Playing these longer term charts I have to accept a higher risk level
Could you elaborate why you think this is the case?
  • #5
  • Jul 21, 2010 4:30pm Jul 21, 2010 4:30pm
Quoting Venice
....Playing these longer term charts I have to accept a higher risk level, but the pay off is of greater value...

That isn't true. It doesn't matter if you're trading a 1 minute chart or a monthly chart your risk doesn't have to increase.
  • #6
  • Jul 21, 2010 5:35pm Jul 21, 2010 5:35pm
Quoting TJPLD
Could you elaborate why you think this is the case?
Quoting GulfCoastPip
That isn't true. It doesn't matter if you're trading a 1 minute chart or a monthly chart your risk doesn't have to increase.
I guess I feel it's a matter of proportions. 15 minute charts show me quicker price action and thus allows me to move quicker, whilst on the longer term charts one mistake can take several days to correct itself... so I need to get it more breathing room...

The difference in S/R levels on a 15 minute vs daily are proportionally bigger...

Unless my logic is just totally screwed up here...
  • #7
  • Jul 21, 2010 5:59pm Jul 21, 2010 5:59pm
Quoting Venice
I guess I feel it's a matter of proportions. 15 minute charts show me quicker price action and thus allows me to move quicker, whilst on the longer term charts one mistake can take several days to correct itself... so I need to get it more breathing room...

The difference in S/R levels on a 15 minute vs daily are proportionally bigger...

Unless my logic is just totally screwed up here...
correct me if I'm wrong.... but what you are saying is that you are not being able to calculate your position size. tick, 1min or weekly, your position is prpoprtional to the % you are going to risk and your SL..

lower TF, smaller SL, more units
higher TF, bigger SL, less units
% of account in risk = same...
Many share my views with me. But I don't share them with them...
  • #8
  • Jul 21, 2010 10:28pm Jul 21, 2010 10:28pm
Yes -- I am thinking in terms of risk in total pips, rather then % account value. That's where the hang up is...
  • #9
  • Jul 22, 2010 4:12am Jul 22, 2010 4:12am
Quoting Venice
I have noticed draw downs start to become much larger. We all know it's impossible to predict tops/bottoms and why draw downs are necessary, even if one has mastered keeping them minimal.
If we see a potential set up on a higher time frame, why trade it on that time frame? We use a suitable R:R ratio for the higher time frame but enter on a lower one. If that doesn't work we wait for a better one. When one does work the drawdown of the losses will average to be considerably less than one trade on the higher time frame.

It's counter-intuitive to set very small trades and watch them make or lose pennies and see lots of small losses but it's the only way in. I could post charts to demonstrate this but it would do us much more good to back test this theory? Tell me if you think I'm wrong.
Gone to a better place
  • #10
  • Last Post: Jul 22, 2010 4:21am Jul 22, 2010 4:21am
Here's a good example of what I'm talking about: http://www.forexfactory.com/showpost...ostcount=48470

I could show you plenty of bad examples!
Gone to a better place
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