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I'm not at all familiar with powertrade, and I don't think
any trader would question that drawdowns can always get
bigger.
My caution is that professional money managers / traders do
not talk in terms of dollars of drawdown, or average $/per
month, etc.
Experienced traders, managers, or anybody who wants to
communicate to same, talk in terms of percentages -- e.g., a
25% DD, a 30% return; and should define what the size of the
account is based upon; what leverage is used, etc.
I generally find that people who talk in terms of dollars
are trying to sell a product to a neophyte trader, and only
rarely impart useful trading knowledge. Just a note of
caution.
Regards,
----- Original Message -----
From: "Ayles" <tjayles@xxxxxxxx>
To: <omega-list@xxxxxxxxxx>
Sent: Tuesday, June 26, 2001 2:38 PM
Subject: Fw: Drawdowns... CORRECTION
>
> Article is from his new site at www.powertradesignals.com
not
> powerdaytrade. Powerdaytrade was the old site.
>
>
> > Article from www.powertradesignals.com
> > Drawdowns - They Can Always Get Bigger
> > May 20, 2001
> >
> > I will admit, as long as I have been trading, as many
drawdowns as I have
> > gone through, and some totally devastating some of my
accounts before the
> > days I focused on money management, they never, ever get
any easier. In
> > fact, logically, they get harder to go through. Why,
because I have been
> > trading for so long, have done so much research,
probably have just as
.....
> > almost all traders make when evaluating drawdowns.
"Well, the largest was
> > $10k so if it goes above a $10k, then the system is
broke". WRONG! WRONG!
> > WRONG! That is like saying that if the historical
drawdown was $10k and
> the
> > system is approaching another $10k drawdown, that the
system actually
> knows
> > that the previous largest drawdown was $10k and
therefore better start to
> > turn around. Or better yet, some traders actually think
that the system
> > KNOWS that it is even in a $10k drawdown. Since each
trade is independent
> > from another, there is NO WAY a system can know what
size of drawdown it
>
> ...
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