My trading returns is about 50% monthly(alpha) and maximum historical drawdown is about 20%. Is there a mathematical way to define the optimal withdrawal rate X%(say when profit level reach y%) to avoid risk of 50% ruin? i.e. how to find X% & y% for the best balance between risk vs compounding rate?
For e.g, withdrawing 50% of monthly profits if returns=50%/max drawdown=25% and only compound the rest of the profits...
i.e. simplified Withdrawal rate=the inverse of calmar ratio.
Is there a better Withdrawal strategy/bankroll management to avoid 50% drawdown?
This is my day trading account which is 33% of my funds that I am willing to risk half of it before I halt trading this account completely.
For e.g, withdrawing 50% of monthly profits if returns=50%/max drawdown=25% and only compound the rest of the profits...
i.e. simplified Withdrawal rate=the inverse of calmar ratio.
Is there a better Withdrawal strategy/bankroll management to avoid 50% drawdown?
This is my day trading account which is 33% of my funds that I am willing to risk half of it before I halt trading this account completely.
