Draw-Down Analysis

Quote from WDGann:



You don't get the point of Oldtrader...

Re-read Ed Seykota's portion in Market Wizard... you're the one mis-focused... Gawd...

"Know First, Realize Half" - Chinese proverb expressing stupid people...
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Thank you for bringing this up. Please excuse me but I didn't find the time yet to read Ed Seykota even once. I know this stuff is kind of popular reading for a certain subset - I'm still struggling with the more down to earth stuff. Glad you pointed this out anyway.

So your Chinese proverb may not apply here. I hope you are not so sloppy in your trading. You sport a pompous name though!
 
Quote from J~Commisso:

I was wondering what sort of measurements you guys (especially those that are or have traded other peoples money, such as P2, MarketSurfer, and Aarron) use when doing a Drawdown Analysis of your accounts???
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Since this was directed at me, guess I'll answer.

So far, I think my worst drawdown this year was about 8% or so (peak to trough). I have only had one down month of a bit over 1%.

In my past, I have had drawdowns of up to 30%. Quite a few were in the 20-25% range, but I have never gone more than 3 months without making a new account high.

I very rarely do much analysis. Most often, a drawdown is either b/c I had a massive gain on a large position and that stock is retracing part of a massive advance (hence the overall positive monthly performance) or the mistake is a one timer for me where I did something stupid, realize it and exited. Therefore, it makes little sense to really overanalyze these things. If there were something I was doing consistently stupid, then that means I should pay attention. Otherwise, since I know it is a one timer, why bother and dwell on the bad rather than researching new ways to make money?
 
P2,

Thanks for your thoughts on the subject. I only directed the question toward you becuase I felt you would have more insight being that you manage a hedgefund and are required to report DD's to your investors...

PEACE and good-trading,
Commisso
 
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