Forex drawdown …no trader wants it but if you are into forex trading , you will face it. Have you ever experienced this situation? No matter what you try, you simply cannot get out of your drawdown?
It seems like the forex market is just against you no matter what you try. You see a really good trading setup. You take the trade. Price does not follow through, it bounces back and forth until your stop loss is hit. Many times, I bust my forex trading accounts because I cannot recover from some of the big drawdowns in my account.
In here I will talk about my experiences of having a drawdown and how I have recovered from them. What percentage of you account have you lost? So a drawdown by defintion is simply a reduction of your trading capital after you have some losing trades. A maximum drawdown MDD is the maximum loss from a peak to a trough of a portfolio, before a new peak is attained. It happened over 2 week period. No matter what trades I placed, I was losing.
Day in day out, every trade I placed, was losing. However, I knew it would end. I knew I would pull out of it, and when I do, it would happen quickly. If you make a lot more than you lose in a trade, you will always come out profitable in the end. The forex industry is kind of spoilt. Wannabe traders then have these unrealistic expectations that you can make money month after month in forex trading. And guess what happens when you get into live trading for real?
You start losing…and if your trading loses start to get bigger and you are suffering a big drawdown, you do not make sense of it and do not realize it for what it it. You see, there will be times when the forex market will go through a period of low volatility, which means price will be in range bound. Price will not see to move much and any moves it makes in that low volatility period will be pretty erratic.
What this means is this: Now, if every trade, you risk around 42 pips, this win would have wiped out 6 losing trades…. Which simply means that you can have more losing trades that winning trades but you will still come out on the top. This is why risk: Lower your risk to 0. Once you do this you can happily lose, know that you are protected, and know that in a few weeks or months things will turn around.
Trading is a long term and boring thing. A lot of people struggle to come to terms with that reality. Losing trades in a row and seeing your drawdowns increase can drive your crazy. I experience drawdowns too. Maybe you can learn something from it. What Is A Forex Drawdown? This is what traders call a drawdown. So how is drawdown calculated? Prev Article Next Article.More...