Tuesday, January 27, 2009

drawdowns

I've been busy on designing new systems that would be profitable since the last post. For now, 4 (amybe 5?) different systems are in my lab and I am using 2 of them in real trading, and the other 2 are waiting in the line. Why? Because the combination of all of 4 requires a big account that could save itself from big drawdowns. Drawdowns are one of the main threats (why not "only" but "one of them", I will explain later) for a system. Sooner or later, an average system will produce positive outcomes. But for small traders who are trying to follow a system, entry point (not of a trade but of a system) could be very important.

What is drawdown? There are some info in here and here. Check them out. I will share my ideas about systems and my trade results later.