I've heard em all, I guess it makes sense. Why deposit a 100% in your account if you're only going to use 40% of it?
If you're not routinely experiencing 50 to 70% drawdowns you are grossley over capitalized that money could be better utilized somewhere else hard case to make with t bills at less than 1%, but in the old days it carried some weight
I mean when you think about it 50% of my account is just sitting there, it will never be used as margin, and hopefully it will never be consumend by loss. So what is it's purpose? Other than to make me feel good.
I dont have to lose 50%. If trading is a business you need to take calculated risks with your money for a certain expected reward. If I have a $100K acct I would NEVER accept draw down to $50K and say that is acceptable. That is simply foolish. Sorry,..not ever going to get me to agree with you on that one. I routinely take 0.75%-1.5% risk on each of my trades and expect to make 2-3x that per trade. Most win and some lose. I dont always win 2-3x amount risked but I win nonetheless. If you are losing 50% and say that is acceptable you need to really improve your win rate on whatever system you are using.
Are we using the same definition of DD? Draw down to me is actual loss in value of capital whether it is realized or unrealized. Utilizing capital in a trade is NOT draw down as long as if I liquidate all my positions I still have my original capital or close to it. So if after that clarification you still think 50% DD is ok then we will definitely have to agree to disagree because no matter how you explain it 50% DD is NEVER acceptable in my book.
but I try to keep an open mind and he does have a point, if you can't risk 70% you are probably over capitalized
NO not gambling,....this is not luck. If it were luck then I WOULD have 70% drawdown. When I first started trading and didn't know anything I did lose 50%. I vowed never to have that happen again. That was 3.5 years ago and NO I will NOT have a 50% DD because I would cease trading LONG before that ever happened. It gets old hearing people on here acting as if trading is just a random thing like pulling the arm on slot machine. Sometimes you win small some big but eventually you will lose all your money. If that is your thought,...then yes YOU are gambling.I however am NOT gambling. I will not gamble and do not gamble in this market. My trades have a defined element of risk and probability of being a winner. Use of risk appropriately is what keeps my trades from being a "pull of the slot machine arm" that eventually will take my money.