The S&P averages a bit less than 10% a year with occasional 50+% drawdowns. I don't have a problem with say 25% or more drawdowns in my trading. The problem tends to be a big drawdown plus withdrawing money every month for living expenses. That makes drawdowns much harder to handle. The only ways to mitigate this is to have other income or to have such a large account that fixed sized withdrawals represent only a very tiny fraction. I currently do some part time IT consultancy on the side, 200 hours a year, ideally i should do about 600 hours to cover all my living expenses and avoid withdrawing from my trading account. The longer term plan/hope is as my account equity compounds up, my fixed sized expense withdrawals will become less of an issue. I dont do any longer term trading, all my trading is short term day trading.
I started long term in 1978 out of fees were $125 for 100 shares of IBM, about the same for commodities, I stayed long term for a good 7 years doing charts by hand. Took me very long seven years of losing to learn how to trade long term commodities and day trading and took me an added seven years to learn how to scalp well. I had full time gov't job, rental houses, and businesses I would start. I think all would do better by having things on the side to lessen up the stresses of trading. I now have a partner as we moving along and seriously thinking of starting a Hedge Fund in two years, my programming is years behind me cause of age and surgeries, so best buddy tired of being a physician but very good programmer. I don't have to beat the S&P Index to do better than the Index, and my drawdowns usually 30-40% of the Index. Trouble with day trading in Hedge Funds, there are limits on volume to safely not make matters worse and cause self worse slippage. And considering I average down on every scalping and day trading, slippage could be numbing, but in no way black swan as I believe in trading one ES for every $5,000.
End of month update for August 2017 I was on holiday for a few weeks so decided to wait until the end of the month to update this journal. Will resume end of day posting in september. Since i last posted, i have had the following losing days: August 9: -2959 GBP August 25: -1464 GBP August 28: -4683 GBP My current drawdown from my previous account high water mark is 18K GBP (23K USD). This is a partial recovery from the 40K (52K USD) drawdown bottom made on August 9th. This partial recovery has relieved most of the anxiety/stress i was starting to feel every time there was another losing day and my account equity was making new lows. I had feelings August was going to be another bad trading month, but luckily volatility was good. The temptation is always there not to trade in August but looking back at the back test some years have had very good August performance for my systems. My discipline is holding up very well since i started this journal. I can report 100% flawless execution since this journal started in May. I have not skipped any entries, not been tempted to take profits early nor switched off the system during losing periods and streaks. List of all Losing days so far in 2017: -5530 -3130 -756 -4379 -265 -2732 -4187 -2058 -4974 -103 -2807 -2766 -3243 -4107 -3778 -5209 -3513 -8699 -4668 -4920 -1842 -1988 -3402 -7001 -3063 -3710 -1787 -5353 -3560 -2187 -8155 -6249 -2959 -2959 -1464 -4683 The above are grouped into streaks, the longest was 7 trading days in a row back in January. 36 losing days in 2017 so far.
Yesterday was a losing day: -2186GBP (-2800USD) This current drawdown from the most recent high water mark is 20K GBP and has now lasted four calendar months. There were a few drawdowns in the back test that were longer than six months, so this one is not excessive and could easily last another four months, or even set a new record: longer than anything seen in the back testing.
Stocks from late 1999 to 2002. Futures from 2004. I have never traded on demo or sim, always live with real money.
After your drawdowns, do you make new equity highs? One of the areas I will check each weekend is equity curves of different methods in which I trade, all have cycles, so when making equity highs, I watch them like they were bar charts and when they are acting with divergences, size gets less, if they change for the good, can always add size, but they generally have same quirks when show drawdowns on the horizon. Not all methods go into drawdown at same time and all study in done on closed profits, studying open positions has been pointless for me as I have no way of knowing what future might bring. Day trading and scalping often gives me biggest drawdowns whether by close of the day or intra day, but all part of the game of numbers and one's faith of the past.
Wow...even when you first open a trading account while unfamiliar with the trade execution platform or when you switched to a new platform considering you haven't been using the same platform since 1999.
The first trade i ever did was to buy 500 shares with a market order using a web based platform. Enter stock symbol, size and select buy and 'market order' from the drop down. Cant really go wrong. It was August 1999 and the internet mania was in full swing. There was no time to mess about with demo trading. Then in 2004 i switched to IB TWS for futures. Which is and was java based, but being a Java developer at the time i had no problems with it. IB never had a demo platform back in 2004 so there was no way of trying demo even if i had wanted to. But I do remember once placing an order in YM in the early days. And IB cancelled it and sent me a manually written email saying my order had been cancelled by IB because it was outside the bust range. And if it had been filled CBOT would have fined me $1000 dollars. Which still doesn't make much sense to me.
Going forward...if you were to switch brokers again...would you demo or simulate trade for a few days or weeks to familiarize you're self to the trading platform prior to going real money trading ?