TIP: Recovering from a Drawdown
|It's important to put a word of caution here: plan your Maximum Drawdowns and strive to keep them between 20 and 25%. Once Drawdowns exceed this amount it becomes increasingly difficult to completely recover.
An advice would be to look at the Maximum Drawdown that your strategy has produced so far, and expect to face a new Drawdown twice as big. Why? Because a registered Drawdown is always historical and a new one can always happen. As you know, past performance is no guarantee of future results. Thus, the next Maximum Drawdown might be much greater than the historical one. If your account, your system and your psyche can stand a Drawdown twice as big as the one you experienced in the past, then you have a sound control of your capital. Read More
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REPORT: Self-Regulate To Successfully Manage Your Trade - Dr. Woody Johnson
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