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Yes, you can go below the max. DD, as long as you bring it back by the close. I have done it more than once. If I recall, you can actually close the trade too, and start with a new one, as long as the DLL hasn't been hit.
Doesn't really make sense, but that is how it works....
It has to simply be a loophole due to technology implementation on the reporting side. I would certainly imagine that a live funded trader, who has a live risk manager, would not be allowed to repeat the same thing.
Thanks for the comments. I do appreciate them, and I like seeing the perspective of readers on this Combine.
The Max Drawdown rule was, in hindsight, something that I did not spend enough time preparing for. Of course, now I am dealing with it, so we'll see how that goes...
I forgot to post Day 3 results, so here are Day 3 and Day 4 results. I have included the trade I did not take because of the risk of ruin in the "perfect" calculation .
Next trade will be 1 contract. It will increase to 2 for the trade after, if the win is big enough.
I'd like to start a discussion on Risk of Ruin. The general concept of a Risk of Ruin analysis is to determine if you will go bust over a statistical number of trades. For example you may have a probability edge of 65% but after factoring commissions, …
Since you have a lot of experience in this area I would welcome your thoughts on that thread, if you think anything can be added to the discussion and spreadsheets.
2 trades today, 2 small winners. With both trades, I traded only 1 contract, per the plan.
Due to increased equity, next trade will be for 2 contracts. So, with my luck, it will probably be a loser!
Big Mike had mentioned a couple of times that he thought I was overleveraged, trading 6 contracts at the beginning. Sizing that big at the start definitely hurt me (it would have helped a lot had I had some winning trades, of course). To "normalize" the results, I include a chart at the bottom of trading 2 contracts for each trade. That should give everyone an indication of how position sizing is helping or hurting my overall performance.
So far, as Big Mike pointed out, my position sizing is really hurting my performance.
Slowly clawing my way back. Next trade will still be for 2 contracts, and if it is a decent size winner, I will increase to 3 contracts.
As I had mentioned before the Combine 2 started, I am using position sizing that is designed to maximize profit, while still respecting the Daily Loss Limit. Plus, it now has to account for the Max Drawdown.
So, for each trade so far, the position size may have varied from 1 to 6 contracts, but in each trade I followed a set schedule for size.
Why do I mention this? Mainly, I want to be clear that position size decisions are not made in the heat of the moment (which almost never ends well). I recommend people make those decisions beforehand, when they have a clear mind and focus. Then, just execute to the plan.