Of course this depends on the asset class and time horizon. But say for Forex doing daytrading or swing trading, what can you expect for a drawdown given a certain leverage ? Where is the limit, where do you can expect to blow up your account ? This question is open to all asset classes, like stocks and futures too. And the question is meant for pros who are knowing what they do (not for newbies, here they should not use any leverage of course and trading very small or demos). Example Stocks with leverage 10 can expect what kind of drawdown traded intraday for example ? Trading Forex with 100:1 leverage daytraded or swingtraded can expect what percentage as drawdown here ? Where are you certain that the account will blow up ? (maybe also in what time period, say within a year, or only within a decade ? (if you can specify that too))
Typical Leverage to Drawdown Ratio ?
- Thread starter TrAndy2022
- Start date
1 pip equals $10, so do the math. If you were trading 100:1 leverage, $10 x 100 = $1000 per pip. So how large did you say your account was?
If you have a stop loss, that is drawdown on a trade.
10 ES contracts and 10 point stop loss = $5000 drawdown if stop loss hit.
If say 5 such trades taken in a day and all full size losers then drawdown = $25,000.
Control your risk regardless of using high leverage or not. Market can make large intraday moves, eg. 1500 points (and even way more than that) in the Dow when you least expect it. Always use a stop loss.
10 ES contracts and 10 point stop loss = $5000 drawdown if stop loss hit.
If say 5 such trades taken in a day and all full size losers then drawdown = $25,000.
Control your risk regardless of using high leverage or not. Market can make large intraday moves, eg. 1500 points (and even way more than that) in the Dow when you least expect it. Always use a stop loss.
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The whole concept of "drawdown" is foreign to me. I use tight stops. If my entry is fucked I take a tight stop. Drawdown, holding on to losing positions is just fkg I would never do.
You should try it sometime. It will allow you see into your innerself, and know what kind of person you really are on a soulful level. I do it often on my large swings, like the one I am in right now. I have found that I am totally normal in swing trading. Join the party, Ken!
Don't make it so complex. It's way over the head of our master teacher and inverse ETF guru.
nice i have found that 4:1 is a good recoverable ratio and though it seems a bit tight to me, it's not in the perspective of flipping the entire position at that point.
otherwise i don't use stops for the most part.
m
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LOL
Good sarcastic points\
but the devil is liar in the evil empire + he pays in fake monopoly money.
Drawdown is a term best used in a bull market, with stocks, stock based ETFs.
IN a bear trend\its either profit or loss[break even - = loss]
WONDER WHY Don Bright Daytrading Co never used forex, plenty of good reasons??
I do like the '' better'' forex ads that disclose in fine print @ bottom of page you cant lose more than your original investment.
LOL