Big drawdown today

My drawdown today has been sky high almost £80 (this is high my account is only a £450 account) but im seeing it improve and its just dipped to £22, My question is do any of you get the urge to close the trades for a loss or do you wait it out and ride the storm so to speak?

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Are you trading without Stop Loss trading tool?

im actually using an EA, However I had some drawdown the end of last week so it didn’t close out the trade over the weekend…Since then I have seen it improve after a very dodgy start this morning. As we speak it is still improving and I am still making money on other trades open.

You need to stop the EA, take a step back and decide if you want to trade or not. If we could all make money using an EA don’t you think we would? If you can show me an EA that makes profits consitantly I would be very suprised. IT does not exits. Even EA’s being sold for thousands will not work in the long run. You are in the difficult phase in which you have not yet realized you have to be different to the 95% of other retail traders and also put in real effort to become successful.

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That’s an 18% draw down.

The EA is opening too many deals, with sizes that are too large for the size of your account.

Likely, it will not end well. Can you reduce the size or how many trades it opens?

If a trade does not, more or less show me fairly quickly that it has potential to make profit, I am looking towards damage control. Hardly, do I let all of them run to hit the stop loss. I am ruthless when it comes to closing losing trades. Sometimes, the price comes back and the trade would have been profitable however, once you fully recognize and understand that protecting your capital is of paramount importance, you just move on to the next one. Hanging on to losing trades, hoping that they turn profitable can eat you up inside and negatively affect your psychology. Which affects the next trade…

Losing less than you budgeted for is also a win.

A 20% draw down is approaching disaster territory for me…

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Well, if you are really making money then no problem; just go for it! By the way, are you an EA developer?

What does anyone gain FINANCIALLY by holding onto a losing deal?

  1. you avoid the costs of getting back into the same market later if price resumes your originally favoured direction. BUT - entry/exit costs these days should be a tiny percentage of the capital risk and of the account capital, not worth worrying about.

  2. you avoid the possibility you will get out and then not notice price has recovered and so miss the opportunity for profit. BUT - you could have set a new entry order when you exited the losing trade on this market. AND - you should not stop watching the chart anyway.

Neither reason makes any financial sense.

No problem whatsoever with my EA, Drawdowns are part and parcel of trading, I had drawdown hit at £150+ yesterday but I wasn’t worried as I fully trust the system, even amongst all this drawdown I still profited £38.03 yesterday…Today I woke up to £16 profit already and barely any drawdown…Im making money on a consistent basis, as we speak im now at £21 profit for the day which is brilliant as its only 8:15am here

You put faith in the system you are implementing if you do not have that faith or trust then why are you using that specific system in the first place? Its all in the mindset…I had major drawdown one day but did I panic no…did my system correct itself yes it did therefore I gained in the end. it just depends completely on your mindset and what you want from this journey

What sort of system worth the name involves major drawdowns?

drawdowns are part & parcel of trading though? I mean you aren’t always going to be in profit with every single trade you have open are you? if you do then let me know your secret :wink:

Drawdowns are definitely inevitable. But they should never be major individually or collectively. Many people set their stops at a max loss per trade of 1 % of account capital, or maybe 2%.

Looking at their trades collectively they then ensure they are not duplicating positions e.g. they’re not going long on 7 different EUR-based pairs, each at a max loss of 1%. That would be a collective long position on the EUR with a risk of 7% of account capital.

That’s what I mean.

This is normally calculated by getting the difference between a relative peak in capital minus a relative trough.