Worst drawdown you can handle?

Discussion in 'Trading' started by a529612, Jan 18, 2007.

  1. What's the worst drawdown you can handle that you know you can realistically trade out of and get back to breakeven?
  2. 20%
  3. -33%... really...
  4. -40% worst case, but then i expect to see +400% in a good year on the upside too.
  5. vikana

    vikana Moderator

    My worse-case DD the over the last two years was ~15%. I have 5% swings at least a few times per year.
  6. Ricter


    The percentages you guys have posted, are these typically "perfect storm" dd's, ie. several plays gone sour at once?
  7. vikana

    vikana Moderator

    In my case, the 5% swings are simply "noise", where nothing is working for a week or two. Happens more than I like, but I don't think it can be eliminated.

    The 15% was two nasty currency trades with monster overnight gaps. Took the losses over a two day period. Obviously, I had underestimated position risk as I would prefer to NOT lose close to 10% per position. I usually size each system such that i'm looking at a simulated worst-case DD of ~ 10% across the system portfolio.

    Edit: a "perfect storm" for me, would probably be close to 30% DD (based on simulations).
  8. One third of my average annual return.