1. Pick a system which has a maximum drawdown of 50%. 2. Trade the system until you have a 25% drawdown. 3. Stop trading the system and say, "Oh my gosh. And it worked so good on paper. Is this how it's going to turn out? Am I just going to keep trading until everything is gone? 4. Find a different system which has a maximum drawdown of 50% and trade it until you have a 25% drawdown. This way you avoid ever having a 50% drawdown in any system which you have tested which has a maximum drawdown of 50%.
Whats to say that the system A) will not rebound right at or near the 25% point, and then you are starting to use system B) just as its drawdown starts to hit. It would seem to me that the way you are suggesting would almost gaurantee failure. Trading is about finding something that works and sticking to it, not jumping around like a headless chicken. Brandon
The old rule for trading systems says: never change while You`re in acceptable DD. Changing strategies is the best way to bancrupcy (discipline is the most important in systematic trading)