Best Way To Deal With A Large Drawdown

[SwingToWin]

There is absolutely no need..., no sense..., no reason - to ever experience a large draw down - none..., nada..., zip
RN

easier said than done

 

[Redneck]

That's amazing, Redneck! You must teach me your ways

Hey Barcadia - Thank You for the Very Kind words - but it simply a number - tomorrow it a memory..., and doesn't mean a thing

====================

As for trading;

Get / stay on the right side of price

Keep each loser small when you're not

Each trade - has a reason for entering..., when the trade breaks down and invalidates that reason - get out

Price movement is a language onto itself - learn it.., as you've learnt your native tongue

Price movement is not random

Each of us has had to find/ create our trading approach - so to will you


Many really good traders on this forum - ask questions - they do respond


Successful Journey to You

RN

 

[Redneck]

easier said than done

Never confuse trading for easy - some days yes..., but other days will more than make up for them - in spades


And never take what I post to ever infer trading is otherwise

I will add this however = Too many make it a lot harder than it needs to be


RN

 

[lucysparabola]

RN, to get rallymode's perspective (and correct me if I'm wrong, @rallymode) you would need to read a post he made about a month ago in another thread regarding retail traders and their "life cycle." the TL;DR version is if you have an edge (in any form, whether "hard" or strategy, etc) that goes through two solid market cycles and survives, then you must master the ability to push it to the hilt. a fantastic post... i'll search for it tomorrow if I remember and post it back here.

 

[Redneck]

LSB

I am always up for..., and open to learning

Thank You
RN

 

[lucysparabola]

I found it. Now for sleep...

I won't bore you with the textbook definitions of edge as i am sure you have done enough searching already but in my opinion you would be wasting your time looking for an edge in the true sense of the word at the retail level. I have traded numerous true price edges over the past 10 years(none in the last 2 or maybe 3) and they were all a temporary deviation from fairval due to supply/demand dislocations. Some came back in line within minutes while others took days or even weeks. They lasted anywhere between a few weeks up to a year or maybe two before they got saturated. Trading a true price edge doesn't feel like executing a trade at some perceived positive expectancy or a higher winning probability but rather like you are literally printing money or even stealing it. Given all the HFT shops and all this liquidity sloshing around the system your time would be wasted seeking one of those. What you should rather do is focus on growing as a trader by developing better pattern recognition skills and enhancing your adaptability. Let me paint you a picture.

After some vigorous backtesting and simulations you discover a strategy that seems to have positive expectancy so since you are still unsure of your skills as a trader you decide to paper trade it first. A few months go by and everything goes as simulated so your confidence grows and you start trading it with real money. You now think you have an edge.

You are profitable for a year or so and your confidence has grown exponentially. You think you have the holy grail so you increase size to capitalize on it. Just a short month later you start to lose money consistently and can't quite figure out why. Your confidence vanishes and you decide to shut down and go back to the drawing board. What you then realize is that you were simply riding a favorable market environment and it wasnt the edge that made the profits. Another month goes by and you have now figured out what has changed in the market. After adjusting your strategy you start trading again making money month after month. You now think that this time you have really found an edge.

Guess what happens next? That's right, the market throws you a curve ball and you are back to losing money consistently. But this time having gone through this before building on your experiences it only takes you 2 weeks to adjust instead of a month before you are back to making money. Rinse and repeat years upon years, after a whole market cycle or two you get to a point where almost nothing surprises you anymore and you can adjust almost instantaneously to the changing market environment while minimizing losses that occur at the turns. Trading starts to feel like printing money. You my friend now have an edge.

Having said all that, if you are a retail trader and after 2 market cycles you are still trading for a living or a paycheck then you have done it wrong. You have failed to embrace risk and didn't seize the opportunity while it was right in front of you.

 

[Redneck]

Eloquently written..., and the vast majority I agree with

I also agree with him on the use of leverage - not ubber excessive leverage - but if available..., and one adept at trading - then it essentially free money available to use - to make money with

What I do not agree with..., and never will.., no matter who says it..., or how ofetn

And especially after living through it more than once

Is excessive draw downs


They are not necessary..., they are extra work - not only to recover from..., but to get back ahead of..., they are an emotional hell..., they are an anchor around one's neck..., they affect one's trading

And if not managed absolutely correctly (the drawdown..., and the trader) - will lead to one's complete and utter trading demise (many people have committed suicide over this exact shit)


I've been doing this far too long for anyone to convince me otherwise


I'm in this to make money - consistently - period

And to hell with the wallstreet bullshit / ego fest (8 / 9 figures my ass)

Hell I could brag if I really wanted to - about the oil trade I have on (talked to H123 about it a while back)

But why..., and to what end - absolutely none

=======================

A trader makes money - that is our job..., that is our only job (protect capital first..., make money second)

And we can do so with any amount

=======================

Likely as not..., Rallymode and I would agree on a lot of trading related topics

But not this one (necessity of excessive drawdowns) - not now..., not ever

============

Sleep well LSB - and Thank You for sharing

Tomorrow we'll do'er all again Sir


RN

 

[bln]

Problem: draw down

Solution: start winning more.. lol, so you get out of draw down.

 

[Turveyd]

Draw downs happen, when your edge stops working, losses happen all the time, so it takes a while to realise its not just a bad run, therefore draw downs, unless you have an edge which never quits are always going to be part of trading.


I liked RNs posts in, post your losing charts, simple setups no issue nothing fancy or special mind, but i don't believe he made 18k , say he took 40pts profit out today, he'd have to be trading at $450 per pt, just not buying it.

 

[barcadia]

Hey Barcadia - Thank You for the Very Kind words - but it simply a number - tomorrow it a memory..., and doesn't mean a thing

====================

As for trading;

Get / stay on the right side of price

Keep each loser small when you're not

Each trade - has a reason for entering..., when the trade breaks down and invalidates that reason - get out

Price movement is a language onto itself - learn it.., as you've learnt your native tongue

Price movement is not random

RN

Hi. Cheers.
Still working on that.
From reading a few of your posts, I can see that you are very much into the phsycological aspects of trading, and getting them parts right.
I kind of feel that I have a good mindset from that point of view in that I can take my losses like a robot, I can be patient and wait for my setups, I don't 'revenge trade', I can let my profits run etc etc, but I feel like, without a 'winning methodolgy' none of these 'abilities' will stop me from losing money.
I've been investigating a number of approaches on various instruments for the last few months. Lots of chart watching and observing price move intraday.
So far, nothing has been better than flipping a coin, but I live in hope.
Am I right in thinking that you just trade off of charts using technicals? trendlines etc?
I see that you almost exclusively trade Facebook? (FB) Do you feel as though you could be as consistent if you were forced to trade somthing else? Say the NQ or an FX pair for example?
Regards.