Capital drawdown phase, is it normal?

Trading
1

I am in a drawdown phase. It’s the first time facing it. I’ve never seen such a situation in my past 3 years where my trades are continuously hitting my SLs. The SLS reached around 5% of the trading capital and is now feeling little discomfort. Now a couple of questions arise.

  1. Cutting my quantity in half till 10% of drawdown and later stop trading for the month if 10% is triggered.
  2. Should I stop completely?
  3. If anyone had faced it prior and survived, I would love to hear some suggestions
1 Like
2

Am not a trader but i used to stop same strategy trades and move to different set ups.

3

In 3 years if you are facing DD of 5 percent for the first time, I guess you have generated atleast 30 percent on your capital so far.
So looks like you have nothing to worry.

4

Hey Jason,

It’s not about the appreciation of capital, which I can use to calm my mind and feel relax from discomfort. But it was more on what could be the next step.

What should I do? Should I lower the size or trade with my actual one. It was to get an idea of what people would have done in their past, so that I could analyse those suggestions.

5

Hey Subbu,

Do you really think changing strategy is a good option when you know it works and given you good return in past?​

6

I would have few strategies/setups not just one strategy when i am trading. I wouldn’t abandon it but certainly pause is ok or trade only when risk reward is highly in favour.

If it’s systematic like momentum or something similar and not discretionary one bit then letting it run unless it comes close to expected dd is ok.

Between what are you trading to have only 5% in last 3 years. Not nuts and bolts but what system?

7

Move to longer expiry

All it takes is some winning trades to gain back the confidence

Obviously, I am assuming that you are an option trader

1 Like
8

fair enough