How to avoid drawdown when you increase your position size?

Quote from EricP:

I would suggest always increasing size by small percentages. Don't double size all at once. Instead, increase size by 15-30% at a time. Wait until you have accumulated net profits at each new size level before you increase size further.

In this way, you never risk too much of your 'profit cushion' by expanding size too quickly and hitting an inevitable drawdown immediately after you size up.
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Thanks a lot for your advice.

I trade very small lot standard HSI, but not the mini due to liquidity reason (volume about 8:1, HSI is as bad as it is). Can't split it smaller ...

In someway I figure growing from 1:2 (done that), then 1:1.5, then 1:1.33 etc, will lessen possible DD...
 
Quote from AaronCapps:

i like to encourage people to use more and more capital as they increase their trading size. As an example, if you trade 1 contract with $5k, maybe use $12k for 2 contracts. The idea is that when you are trading many contracts, you will still see strong returns from the compounding of the accounts, but be risking smaller percentages of your account. It's all relative.

I have posted an excel file that i use as a guidepost. I hope it helps someone, and i welcome any comments on it.
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Agree on that, gonna decrease my max DD as time goes on. Aiming at some where in the middle between decreasing max acceptable DD, increase in required capital.
 
Also, do not understimate the psychology behind your trading ability to manage higher and higher capital at risk. You need to find out your comfort zone in how much you trade. If you have too much at stake, you might not be able to sleep well at night and, most importantly from a performance standpoint, you might have a tendency to take profits too early or losses too late because the money involved is above your comfort zone.
 
Quote from Willleung:

HSI futures, hold overnight

mid 20s.
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imo, basically impossible, particularly trading too many markets uncorrelated. Higher MaxDD (say over 30%) would be even harder.

One possibility for doubling capital size I guess would be when trading one single market with trend following style, you might be able to avoid bad timing at changing direction.
 
Quote from OddTrader:

imo, basically impossible, particularly trading too many markets uncorrelated. Higher MaxDD (say over 30%) would be even harder.

One possibility for doubling capital size I guess would be when trading one single market with trend following style, you might be able to avoid bad timing at changing direction.
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Impossible as in having a 20% DD or not having a 20% DD?

I trade HSI futures only, and yes, my lowest trigger is trend fellowing.

System works on HHIF, but felt they are so correlated, I rather disvers throught with an extra day trade system, when the account is large enough.

Initially I funded the account with around 15k USD, then with an extra 28K since my current system is proved stable, on top there are 4.5K profit.

The problem is, the account have 300% additional capital (extra funds and profit), and my size is only 200% up from the initial. Would appreicate advices on how to fully utilize the addtional funds at the right moment.
 
Quote from Willleung:

Impossible as in having a 20% DD or not having a 20% DD?

I trade HSI futures only, and yes, my lowest trigger is trend fellowing.

System works on HHIF, but felt they are so correlated, I rather disvers throught with an extra day trade system, when the account is large enough.

Initially I funded the account with around 15k USD, then with an extra 28K since my current system is proved stable, on top there are 4.5K profit.

The problem is, the account have 300% additional capital (extra funds and profit), and my size is only 200% up from the initial. Would appreicate advices on how to fully utilize the addtional funds at the right moment.
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If trading unleveraged, a higher MaxDD means a system does not perform well in tracking trends close enough, and off timing. You'll be too late to act, without knowing roughly the turning region of a trend, making this issue much harder to handle, imo.
 
Do you know when you make an entry, if it has a higher probability by looking at the "set-up", objectively?

If so, then you could apply a method directly to the trade "set-up" rather than what the market does not know (your condition).

Start thinking like this or at least consider a rank to your "set-up's", to determine your bet size, otherwise you are wasting your time in my "not-so-humble-opinion" :). There is just "no way" to put strings of wins or losses "in a can."

Michael B.
 
Quote from OddTrader:

If trading unleveraged, a higher DD means a system does not perform well in tracking trends close enough, and off timing. You'll be too late to act, without knowing roughly the turning region of a trend, making this issue much harder to handle, imo.
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OK...

The largest DD I faced rightnow is about 40% the max accept DD.

My max DD is computed based on one of Acrary old post. With losing % =50%, 0.5^7 = 0.0078 or 0.78%, so 7 losses in a role is expected. My average loss is 47 pts and 69 pts (backtest period, forward test period; HSI pts). 69x7 = 483 pts. You know the rest...

15% margin of safety = 560pts at 50 HKD = 28 HKD max acceptable DD, and I used 100k to trade one single contract (for now) hence 28% for the max acceptable DD.

I sit out of the market 75% of the time (both backtest and forward period).


Odd, am I too pushy in my trading?
 
Mic,

That's more along the line of what I am thinking...

There are reasons/objective for the different types of entries I used, and they are tested individually before combining them into a system.

I was thinking like, should I size up on a pull back type of entry or a mid trend entry etc...


Guys,

Thanks a lot for the advice, Mic's words got into my head

[/B]There just is "no way" to put strings of wins or losses "in a can."

Michael B. [/B]
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You seem to have an edge, so the thinking is that anything will eventually work...but be efficient and strive for the best way and may your equity curve be Smooooth and upward sloping with no cliffs!

Thank you for considering my ideas. Now teach me to trade better in return! Please continue your most excellent threads and posts!

Michael B.



Quote from Willleung:

Mic,

That's more along the line of what I am thinking...

There are reasons/objective for the different types of entries I used, and they are tested individually before combining them into a system.

I was thinking like, should I size up on a pull back type of entry or a mid trend entry etc...


Guys,

Thanks a lot for the advice, Mic's words got into my head
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