What is the maximum drawdown you would be prepared to take?

C

Cutten

Imagine you have a $200k account. What is the maximum drawdown you would be prepared to risk in order to maximise your returns?

If you had $1 million, would your answer be different and if so, how and why?
 
I trade stocks and typically have 5 positions on at the most. I am
willing to risk 2 % of equity in each position so if there are no gaps etc over my stop I am willing to take a 10 % drawdown with
5 positions. This would not change whether I had 100 K or
1 mill.

chip
 
That depends to a great degree on the potential reward. I might not risk 10% to gain 10%, but would do it to gain 50%.

Also depends on the risk. If it's a true abritrage trade where there's no risk if executed right, then I'd bet a lot more than on a directional trade.
 
That is not the definition of DD. What if you had several days where cumulatively, it added up to a 15-20% loss? That would then be a DD and the question of this thread would apply.

Quote from Chipdude:

I trade stocks and typically have 5 positions on at the most. I am
willing to risk 2 % of equity in each position so if there are no gaps etc over my stop I am willing to take a 10 % drawdown with
5 positions. This would not change whether I had 100 K or
1 mill.

chip
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