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Aggressive Systems Trading Drawdowns
- Thread starter Businessman
- Start date
Businessman,
If you don't mind me asking, what type of system do you trade?
Is it a trend following system or a mean reversion system or...??
Thanks,
Nizar.
If you don't mind me asking, what type of system do you trade?
Is it a trend following system or a mean reversion system or...??
Thanks,
Nizar.
Quote from Businessman:
The account is already up well over 200%, so all future drawdowns are going to come out of profits (the markets money) and wont be as hard to endure as a drawdown in the original starting equity.
You said you are basing your strategy at least in part on something you read in Market Wizards.
Presumably, then, you know that many of the traders interviewed in that book voiced their disdain for people who use the phrase 'playing with the market's money'. I recall that Bill Lipschutz in particular said he thought it was ridiculous to think of booked profits as 'the market's money', the loss of which could somehow be viewed differently than the loss of... money that wasn't the market's, I guess?
I don't even think of open position gains as the market's money. I wake up every morning and ask myself if I would initiate the position at that moment. Of course I don't always close out positions that are underwater, but that's the way I try to think about it.
You seem to have some grounding in systems design theory. I wish you the best and hope you can recover from this current drawdown.
Quote from traderNik:
You said you are basing your strategy at least in part on something you read in Market Wizards.
Presumably, then, you know that many of the traders interviewed in that book voiced their disdain for people who use the phrase 'playing with the market's money'. I recall that Bill Lipschutz in particular said he thought it was ridiculous to think of booked profits as 'the market's money', the loss of which could somehow be viewed differently than the loss of... money that wasn't the market's, I guess?
I don't even think of open position gains as the market's money. I wake up every morning and ask myself if I would initiate the position at that moment. Of course I don't always close out positions that are underwater, but that's the way I try to think about it.
You seem to have some grounding in systems design theory. I wish you the best and hope you can recover from this current drawdown.
I cannot agree with this more.
businessman,
It is NOT the market's money - it's your money AT RISK all the time. You're shooting yourself in the foot psychologically by thinking this way - from personal experience with this type of self-inflicted sabotage, it causes one to take undue risks during times of drawdown as well as during times of higher than normal profitability (in fact you should be doing the exact opposite during those times, they represent skews in the systemic risk, i.e. something in the market dynamic is changing).
Also, 5% is extreme IMO. My personal threshold is no more than 2% intraday for my systems.
Good luck with this system, it sounds fundamentally solid - you'll get out of this drawdown soon.
Regards,
Mike
Quote from JimmyJam:
We all know what that means, so now what?
JJ
Nothing changes, i continue trading and enjoy the drawdown in my equity.
Hopefully it wont exceed three sigmas but if it does i will continue to cut risk and continue on until the equity curve bottoms out.
traderNik and Mike805,
Regarding Markets Money, at the moment the account is relatively small (low six figures) so i dont mind losing most of my profits. As my account gets bigger the amount of profits i consider to be the markets money gets smaller and smaller.