What I can tell you is that I make those decisions on a case by case basis based on the individual merits of the trade in question at the time. My stating that DD of that magnitude will not occur again is no different to me than stating my largest magnitude positive monthly return ever WILL occur. It's simply not probable to predict. The vast majority of months will not be outliers but closer to the long term average.
What I will say is that my long term 'risk adjusted returns' are actually very favourable on a relative basis. Compared to equity indexes for example my returns have been higher, with less relative risk / DD. I cannot predict significant spikes up or down anymore accurately than I can predict future stock market spikes except to say that there will be more positive moves than negative ones.
I can also tell you that trading through my worst month ever was more constructive to me personally than trading through my best month ever. The reason is because I analyze and learn more after going through tough DD which doesn't tend to happen as much when trading very profitably.
While you are correct to assume that a larger than average DD in a forex chart could POTENTIALLY be a sign of trouble, (Especially for 'systems based' trading or single currency pair strategies) that has never been the case for me because I am not a systems based trader nor do I stick to one specific currency pair. Every historical occasion of significant DD in my history was it's own unique case which did not repeat again. The next one would be a different animal entirely which is also an accurate characterization of my best months ever.
What I will say is that my long term 'risk adjusted returns' are actually very favourable on a relative basis. Compared to equity indexes for example my returns have been higher, with less relative risk / DD. I cannot predict significant spikes up or down anymore accurately than I can predict future stock market spikes except to say that there will be more positive moves than negative ones.
I can also tell you that trading through my worst month ever was more constructive to me personally than trading through my best month ever. The reason is because I analyze and learn more after going through tough DD which doesn't tend to happen as much when trading very profitably.
While you are correct to assume that a larger than average DD in a forex chart could POTENTIALLY be a sign of trouble, (Especially for 'systems based' trading or single currency pair strategies) that has never been the case for me because I am not a systems based trader nor do I stick to one specific currency pair. Every historical occasion of significant DD in my history was it's own unique case which did not repeat again. The next one would be a different animal entirely which is also an accurate characterization of my best months ever.
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