Risk of Ruin

This is a discussion on Risk of Ruin within the Psychology, Risk & Money Management forums, part of the Methods category; Originally Posted by Kaeso Calling your account loss from the beginning "drawdown" is slightly confusing things, and being a bit ...

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Old Dec 4, 2017, 8:57pm   #25
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Originally Posted by Kaeso View Post
Calling your account loss from the beginning "drawdown" is slightly confusing things, and being a bit hard on yourself. Its just initial losses from when you first started, were newbie etc, and this "being underwater" may continue for some time..no probs

Think about "drawdown" only over a period where you have made money i.e. to assess how much "drawdown" was necessary to achieve that return - then its meaningful.

I hope that doesn't sound pedantic, i'm just trying to help if i can!
Yeah the stats are muddied by the initial period, but then again, I did only have a 34% win rate last month. This month I am 0 from 3 I'm optimistic I can turn that around by the end of the month.

I should probably update my intentions to the journal
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Old Dec 4, 2017, 10:11pm   #26
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Yeah the stats are muddied by the initial period, but then again, I did only have a 34% win rate last month. This month I am 0 from 3 I'm optimistic I can turn that around by the end of the month.

I should probably update my intentions to the journal
Yeah if you think about it, having more losers than winners means after you've taken a loss the next trade is still statistically likely to be another one, so don't be surprised about consecutive losses

Some traders say one should focus on the losses more, and in situation of less than 50% win rate ones trading is literally mostly dealing with losses, although sufficient R/R can mean you've made money still, maybe that's what they mean.

Last edited by Kaeso; Dec 4, 2017 at 10:17pm.
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Old Dec 4, 2017, 11:14pm   #27
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Originally Posted by Kaeso View Post
Yeah if you think about it, having more losers than winners means after you've taken a loss the next trade is still statistically likely to be another one, so don't be surprised about consecutive losses

Some traders say one should focus on the losses more, and in situation of less than 50% win rate ones trading is literally mostly dealing with losses, although sufficient R/R can mean you've made money still, maybe that's what they mean.
Of course

I've traded quite a lot in the last 2 months, so using the first three months of losses as a reason for the 42% win rate etc... is rapidly becoming less relevant. The drawdown stat sucks but the likes of win/loss rate I should be able to correct in the short-mid term. Let's see
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Old Dec 27, 2017, 8:47pm   #28
 
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If you trade following all the strategy rules and MM without breaking them then you'll manage to drammatically reduce the risks.
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Old Mar 2, 2018, 11:42am   #29
 
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Strict following money management rules and strategy certainly reduces risks a lot. However, there is no guarantee that your trade will be successful.
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