![]() ![]() I just need to trade about 9 trades on average to hit my target if I use a 100 dollar risk per trade. With stats, my expectancy per trade is 0.4 x 1000- 0.6 x 100 or 340 per trade. I just need to win 3 times in a row right? Those are both astronomically small numbers. Or 15 losing trades after a new equity high 1000 dollars above us. We can model this by losing 1000 from equity high then calculating risk of blowing up from a remaining drawdown of 1500. If my stats hold and I execute with 100 dollars of risk with everything the same, I would need to lose 25 times in a row from any new equity high.Īnd take into account a possible anomaly (if sticking with the system) of a profitable trade not filling at target and coming all the way back. If I reset a bunch, then I'll prob make it but I don't think that's ideal. There's a lot of chances that my 500 risk will blow the account. I can also fail if the path of the trade fails and turns back on me even though my profit target is eventually hit. I can also fail if I don't execute at a 40 percent win rate. The problem with this analysis is that I can fail this if my trade does not hit profit target. I will still be able to pass if I am down to my last 500 dollars of risk cuz I will hit the profit target in one trade based on my statistics. The chance of 5 losses in a row is (1-0.4) 5 or 7.7 percent. If I select to trade with the same size each trade where my losers is 500 dollars, I have essentially given myself 5 trades before I bust but I can pass the evaluation in one trade. If you have a system that wins over several trades, you need to risk less so that periods of drawdown never have a chance of reaching the trailing.įor example, I trade with a 1 to 10 risk reward ratio minimum for a vast majority of my trades. The thing is, if you have a system where you can lose more than you win on a trade to trade basis, it's not winning. Essentially, if you have a trailing drawdown of 2.5k and a profit target of 3k, you can never lose 2.5k from the top of your open balance. ![]() Question B: Yes, at least on the evaluation account. If profit goes up by the drawdown then back down by the drawdown, you've failed by sizing way too big and not taking profits prior to the drawdown Question A: Yes, the trailing drawdown is present all the time, even in green trades. Question B: Is it all true and do I understand it correctly? Is there something I'm missing and/or something important to add? Question A: Does the trailing drawdown count at any point of your trade? Like it's enough at any point in open position you hit your trailing drawdown and you're a goner even if you end up green in the trade? Which in reality basically means you have to double your account without a major drawdown first and then still start from the beginning at 50k (Question B). Trailing drawdown goes up but never goes down until you reach your starting account balance (be it 50k) and it stays there, doesn't go up anymore. When on day two you lose -$2000 (now 49k), your trailing drawdown stays at 48.5k so now you have $500 account and once you lose it, that's it. On day one you earn +$1000, your account balance is 51k and your trailing drawdown makes now your account disappear at 48.5k. So if you start with $50k account and your trailing drawdown is $2500, your account shuts down when you hit $47.5k (Question A). If your trailing drawdown is $2500, you reach it and you're a goner, that's your account size - but wait, there's more - it's your whole account size every day you trade. Your real account size is your trailing drawdown. The number they give you is only hypothetical buying power (50k, 100k.) that's straight up suicidal to use. Just want to know if I understand it correctly. Trailing drawdown is one of the main "weapons" of a prop firm against you as a trader. r/PriceActionTrading - Discussing price action trading.visit each related community on Reddit and join their discord chat too!.If you're trying to be an asshole, it's probably because you're raging from a loss, stop and deal with your issues or ask for help instead of taking it out on other people. No spamming, selling, or promoting do that with Reddit advertising here! Content creators must follow these guidelines if they want to post here.ĭon't be an asshole: You can provide constrictive criticism, but outright being an asshole doesn't belong here. Stay on topic: No content unrelated to Daytradingĭon't glorify losses or post wins without context details here. Posting & commenting requirements: Three (3) day old accounts and minimum 10 comment karma also follow the rules below: Subreddit Rules If you're new to day trading, please see the getting started wiki. ![]()
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