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Hello, I'm new to RealTraders. I've daytraded the S&P's for almost 2 years.
So far , I've managed to be profitable. My question is: What are your thoughts
on dealing with a large drawdown, which I seem to go through every 6mo. or so.
To me a large drawdown is when the DD approaches or exceeds 50% max historical
DD (my tests cover 10 yrs). This year I've even exceeded max hist. DD, but my
net this year was over +100%. Currently, I stay the same size, anticipating a
more rapid recovery to new equity highs than if I cut back. The problem is as
my equity shrinks I am tempted to cut back my size accordingly to preserve my
equity, these are my most trying times trading. Tho so far its worked.
Mentally its no fun and at these times I seem to make more basic trading
mistakes.
Any suggestions or formulas on other ways to manage a drawdown?
Thanks,
Bob Redman
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