Drawdown Control? | Forex Factory

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Drawdown Control?

  • #1
  • First Post: Nov 25, 2011 7:26pm Nov 25, 2011 7:26pm
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.
  • #2
  • Nov 25, 2011 8:33pm Nov 25, 2011 8:33pm
Quoting mr.marketz
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...
Excellent post!!

In the forex world, there will always be another brijon lurking around the corner.
  • #3
  • Nov 25, 2011 8:58pm Nov 25, 2011 8:58pm
Mr. Marketz hits the nail square on the head.

Of course this "hype" is also associated with a few other popular threads
in here from others than Brijon.

Trading is like any other profession. When you become educated and good at what you do, it enables you to spot shoddy work, practices etc....quite often within a blink of an eye.

Some call foul when we call out these situations but we call them out because they are painfully obvious to those that know. Those that have been around the block more times than you can count.

Averaging down, hedging, freezing time (love that one) adding multiple contracts in drawdown are a good quick way to wipe your self out of the market.

These types of methods as well don't generally lend themselves to be scaled into larger accts. Meaning what works with small numbers( mini accts) doesnt necessarily work when you have a large acct.

So you can beat your chest all day long about 20% monthly gains but they are simply not sustainable when larger numbers/contracts come into play.
Especially combined with "recovery" trading (drawdown control) or whatever new spin you put on it.

Does not work period.

Cheers

Bluesteele


PS If someone tells you they can freeze time. RUN and don't look back! LOL
Master your Mind,,,Master the Market
  • #4
  • Nov 25, 2011 10:16pm Nov 25, 2011 10:16pm
if mr Brijon was making so much money than i direct you his youtube channel

Brijon youtube channel click here

showing even him using jackos method, renko and all sorts, so much for the old ticker tape and no charts tut tut
  • #5
  • Nov 25, 2011 10:32pm Nov 25, 2011 10:32pm
wow Brijon has really lost it, with this Crim stuff

check his latest vid on youtube in reaction to his suspension from Forex Factory

Inserted Video
  • #6
  • Nov 25, 2011 10:43pm Nov 25, 2011 10:43pm
gets better check out his vid: posted a couple days ago
"draw down 100 square with max k fighting crims"

Saying how the crims are pushing their threads up manipulating the market we are.LOL Off the wall...off the rocker.. WOW incredible stuff.

I really like how in his "market manipulation" video it's well printed coherent etc... Hmmmm....He speaks fine too. So why is his writing so f'd up. Because he's a sham..Simply playing games with all the noobs.
Master your Mind,,,Master the Market
  • #7
  • Nov 25, 2011 10:45pm Nov 25, 2011 10:45pm
Quoting bluesteele
gets better check out his vid: posted a couple days ago
"draw down 100 square with max k fighting crims"

Saying how the crims are pushing their threads up manipulating the market we are.LOL Off the wall...off the rocker.. WOW incredible stuff.

I really like how in his "market manipulation" video it's well printed coherent etc... Hmmmm....He speaks fine too. So why is his writing so f'd up. Because he's a sham..Simply playing games with all the noobs.
yea i watched that video he actually says my name "deankenny21" in it, like im the master CRIM, i feel honoured lol.

ANd on another note stroke is a serious thing, have u ever seen or heard anyone who has suffered from a stroke, they can barely speak bless them, hear Brijon talk and make your own mind about this one.
  • #8
  • Nov 25, 2011 10:48pm Nov 25, 2011 10:48pm
Quoting deankenny21
yea i watched that video he actually says my name "deankenny21" in it, like im the master CRIM, i feel honoured lol.

ANd on another note stroke is a serious thing, have u ever seen or heard anyone who has suffered from a stroke, they can barely speak bless them, hear Brijon talk and make your own mind about this one.

Master Crim has a nice ring
Master your Mind,,,Master the Market
  • #9
  • Nov 25, 2011 11:33pm Nov 25, 2011 11:33pm
The market stands ready at all times to punish the fool. If you trade irresponsibly, you might "make a lot fast" but the market will always take it back. DD means you are wrong in your trade, you are trading against the flow. To me, 10 pips DD is no different than 100 pips DD. Also, there is never a guarantee in the market. If you are letting a trade go into a loss and HOPING it will come back and if this is a habitual part of your trading, well, then, you should not expect to ever be successful. The market will unrelentingly discipline you and continue to take all your money and keep your equity flat or trending down until you learn this lesson.

We traders are nothing more than fisherman when we come to trade. Our account balance is our bucket of bait. A wise fisherman would never use all his bait on a single cast of the hook. Keep your trades small and cut losses within 3-5 pips. Have areas of interest in mind where you might want to place a trade, even if it is round numbers or something simple (these are your secret fishing spots) if you don't get any bites (Draw down) trash the trade. Sometimes its take me a few tries to get the hook set right. Sometimes you are just wrong and you need to be trading the other direction. Here is a little secret I've learned: When you get bumped out of the market a few times and you are getting frustrated, it's easy to become convinced that the market is going to turn around any second. If you've been trying to sell into net positive flow, you will at some moment think about buying and say "man I wish I would have just been buying for the last two hours, look at all those pips I could have made." Then a destructive assumption creeps in- you probably don't even consciously think it, you assume the buying is probably just about over and your opportunity for a long is now gone too. Don't follow that assumption. Go against that strange feeling in your gut and begin attempting to buy. As you begin getting profits the feeling will become more intense that the market is almost done going up, buy a little more. It isn't natural in our brains to buy as price is going up, we keep trying to sell into it-- to catch the top. This is what everyone does and most people never figure it out. If buyers are active right now, buy with them. They might just be a huge bank that is nowhere near done buying. If the market stops going up then starts going down, sell. Don't marry your trades but be quick to get rid of them if you are being squeezed. You can never know how much the market is going to run against you.
  • #10
  • Nov 25, 2011 11:49pm Nov 25, 2011 11:49pm
Quoting Scotty B
The market stands ready at all times to punish the fool. If you trade irresponsibly, you might "make a lot fast" but the market will always take it back. DD means you are wrong in your trade, you are trading against the flow. To me, 10 pips DD is no different than 100 pips DD. Also, there is never a guarantee in the market. If you are letting a trade go into a loss and HOPING it will come back and if this is a habitual part of your trading, well, then, you should not expect to ever be successful. The market will unrelentingly discipline you and...
Great post!
  • #11
  • Jan 16, 2012 10:13pm Jan 16, 2012 10:13pm
This has again been resurrected under what.

Pitbull trader with position building.

As well NanningBob and his "recovery methods".

"A fool and his money are soon parted."

Cheers,
Blue
Master your Mind,,,Master the Market
  • #12
  • Last Post: Jan 17, 2012 7:25am Jan 17, 2012 7:25am
A model example of gut feel and the market emotion cycle.
Thanks!

This is how I read your example:
Quoting Scotty B
If you are letting a trade go into a loss and HOPING it will come back and if this is a habitual part of your trading, well, then, you should not expect to ever be successful.
If you take the market emotion cycle literally, then that's false.
But if one takes into consideration how your example works, then one realizes that one either is into the chart's body of motion or not, and mere hope, while ideally placed on mec, misleads one into a false confidence based only on oneself.
Quoting Scotty B
Have areas of interest in mind where you might want to place a trade, even if it is round numbers or something simple (these are your secret fishing spots) if you don't get any bites (Draw down) trash the trade. Sometimes its take me a few tries to get the hook set right.
The chart iis like a body of knowledge with its own collective gut feel for direction. One begins to understand its direction after running a series of appropriate tests on it.
Your analogy is great. Personally, I couldn't stand your allowance for unexplained/able intuition: Each to their own.
Quoting Scotty B
...
Sometimes you are just wrong and you need to be trading the other direction.
Yeah, a strange, wrong gut is a great signal and reverberates through the entire body. I don't like to be wrong in a trade (insecurity, perfectionism, or something), so I'd rather catch myself before this.
Possible sources of misdirection include
the weight and thus involvement of how any disturbing scenarios in one's life are including and versus the chart's,
one's set point of trust of on-the-level reasoning to figure a chart
versus the chart's power to overwhelm a trade -- due to the noted (insecurity, perfectionism, or something),
or the ability to handle one's other capabilities such as emotions' directives, gut feel, and senses' attentiveness around others.
Quoting Scotty B
"man I wish I would have just been buying for the last two hours, look at all those pips I could have made." Then a destructive assumption creeps in- you probably don't even consciously think it, you assume the buying is probably just about over and your opportunity for a long is now gone too. Don't follow that assumption.
Greed, on the market emotion cycle -- Right before the top, according to mec.
Quoting Scotty B
Go against that strange feeling in your gut and begin attempting to buy.
Terrific description. The gut is paying attention to one's own need for pips, rather than the reliability of the chart study that was done; thus, with so little nutrition (having been "fed" the chart's information), it feels strange. You say to reject the noxious attention and thus go for the only other choice, as if oneself times around when greed plays in so plainly and directly. (NOTE: I doubt greed is always so plain; the gut may partially accept a new glance of the chart and include its poor nutrition, imbalancing the directional flip.)
Quoting Scotty B
As you begin getting profits the feeling will become more intense that the market is almost done going up, buy a little more. It isn't natural in our brains to buy as price is going up, we keep trying to sell into it-- to catch the top.
Often too literal, only it may work, especially if one has trained around the either-or nature of round numbers and other horizontal lines.


Again, thanks for the description.
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