One of the biggest lies told constantly in forex – is this…
Trading with the lowest drawdown strategy is desired.
In fact, wanna be (profitable?) forex traders are so brainwashed about drawdown – they live their entire trading life trying to find and produce the lowest drawdown strategies.
When in fact, low drawdown simply equates to low profits.
^^ read that as many times as your brainwashed brain needs – to correct your trading path.
Simply put, with more risk, comes more drawdown – and more profits.
I have personally shown someone one of my high risk accounts showing a one time 70% drawdown and their brainwashed mind literally freaked out – instantly thinking my trading knowledge and strategy were terrible; when in fact I was earning a 60% monthly profit.
Is drawdown an actual metric you should pay attention to?
As a very profitable trader – I say NO.
I say drawdown is useless absent two other factors – profit and more importantly “margin level %”.
All the brainwashed wanna be can see is the 70% drawdown figure.
Profit means nothing to the drawdown focused.
Yet my profit is very high (yes, I’m risking a LOT) in this scenario.
However, my margin level % was 800% at worst.
The broker margins you out (stops you out? takes your drawdown and turns it into a loss?) at say 49%.
So I wasn’t even close to getting stopped out (margined out?).
Also, drawdown is simply a potential that you could lose – yet your average trader sees a negative and they lose their mind.
Drawdown is NOT a loss at all – hard to get that through to many people.
Its time to STOP putting all of your emotions into FOREX DRAWDOWN and instead focus on “Margin Level %” as your risk indicator.
Its just a simple mind shift – try it on a demo account and eradicate your drawdown mind virus fast.
Judging a forex system or trade by its “drawdown” is misleading at best; focus on what really matters and not emotional feelings about and unrealized loss.
Terry
Master Algo Trader
