If you had a strategy that had tested well and then performed in live trading as predicted by your testing, and it had a maximum historical drawdown of 20% with no leverage, would you leverage it? If so, by how much?
Would You Leverage This Strategy?
- Thread starter GarrettKimmel
- Start date
A lot of ifs.
Find a period of time that it didn't perform as tested. Then, when found, decide whether you want to leverage or trade the strategy at all.
If you can't find a period of time that doesn't perform as tested, you do not know how to rigorously test data. In this case, get it over with. Max leverage and get rich or go home broke in the shortest amount of time possible.
rmorse
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You are not providing enough information for a response. A 20% DD for a strategy that provides 100% per year vs 8% per year would be very different. Also, is that DD for one day, one month or one year. What is the asset class you are trading?
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GK;
This will be a bit general + a small sample;meaning not many would trade or invest this way- especially with leverage, but its got about a 20%/+ drawdown[in one year]. One year chart made money; 2 year chart made money.10 year chart,oops it lost about 90% unleveraged. As far as leverage; usually not- unless its a strong+ somewhat early trend.Some trends i see maybe strong; but so old; so no on leverage.Max leverage is an unforgettable teacher, some like it.
That's wisdom, not a prediction.Wonder if the insurance co knew more about risk+ profit than i did??They charged me much, much more when i was young+ took more risk.
...instead of hypothetically thinking too much.This.
I wouldn't be able to decide, just from the information you've so far given. I'd need to know what the instrument is, the R:R, PF, sample-size and so on, to try to judge whether it might be safe.