Risk of Ruin

[mpups]

Hi Nowler

I wouldn't assume its your win rate which is the main focus. Its the combination of win rate and risk/reward which generates positive expectancy (which you know). Perhaps its easier for you to improve your R/R than it is to improve your win rate. Just a thought...

 

[Nowler]

I think most traders would consider 60+% DD, 42% or worse 34% win rate to be a very poor strategy and not worth trading.

Agreed.

Most of that drawdown occurred in my first 3 months of learning to trade.
It's not indicative of a particular strategy, but rather everything I have tried and tested.

Lets see if I can bring those numbers up over the next few months :smart:

 

[Nowler]

Hi Nowler

I wouldn't assume its your win rate which is the main focus. Its the combination of win rate and risk/reward which generates positive expectancy (which you know). Perhaps its easier for you to improve your R/R than it is to improve your win rate. Just a thought...

I agree, its a combination of both.

I will try to increase both over the next month, just to see what I can actually do. No exploratory trading. I stick to a limited number of strategies

 

[mpups]

Most of that drawdown occurred in my first 3 months of learning to trade. ...

Calling your account loss from the beginning "drawdown" is slightly confusing things, and being a bit hard on yourself. Its just initial losses from when you first started, were newbie etc, and this "being underwater" may continue for some time..no probs

Think about "drawdown" only over a period where you have made money i.e. to assess how much "drawdown" was necessary to achieve that return - then its meaningful.

I hope that doesn't sound pedantic, i'm just trying to help if i can!

 

[Nowler]

Calling your account loss from the beginning "drawdown" is slightly confusing things, and being a bit hard on yourself. Its just initial losses from when you first started, were newbie etc, and this "being underwater" may continue for some time..no probs

Think about "drawdown" only over a period where you have made money i.e. to assess how much "drawdown" was necessary to achieve that return - then its meaningful.

I hope that doesn't sound pedantic, i'm just trying to help if i can!

Yeah the stats are muddied by the initial period, but then again, I did only have a 34% win rate last month. This month I am 0 from 3 I'm optimistic I can turn that around by the end of the month.

I should probably update my intentions to the journal

 

[mpups]

Yeah the stats are muddied by the initial period, but then again, I did only have a 34% win rate last month. This month I am 0 from 3 I'm optimistic I can turn that around by the end of the month.

I should probably update my intentions to the journal

Yeah if you think about it, having more losers than winners means after you've taken a loss the next trade is still statistically likely to be another one, so don't be surprised about consecutive losses

Some traders say one should focus on the losses more, and in situation of less than 50% win rate ones trading is literally mostly dealing with losses, although sufficient R/R can mean you've made money still, maybe that's what they mean.

 

[Nowler]

Yeah if you think about it, having more losers than winners means after you've taken a loss the next trade is still statistically likely to be another one, so don't be surprised about consecutive losses

Some traders say one should focus on the losses more, and in situation of less than 50% win rate ones trading is literally mostly dealing with losses, although sufficient R/R can mean you've made money still, maybe that's what they mean.

Of course

I've traded quite a lot in the last 2 months, so using the first three months of losses as a reason for the 42% win rate etc... is rapidly becoming less relevant. The drawdown stat sucks but the likes of win/loss rate I should be able to correct in the short-mid term. Let's see

 

[Dagerban]

If you trade following all the strategy rules and MM without breaking them then you'll manage to drammatically reduce the risks.

 

[Arashimuro]

Strict following money management rules and strategy certainly reduces risks a lot. However, there is no guarantee that your trade will be successful.

 

[Nowler]

Quick update:

I started what I call my "Post Beginner" account in November.
Wanted to start fresh, free from the errors I made when I first began trading. Just to have a clearer picture of where I'm at.

I no longer have a 99% RoR, but rather <1% (which i'm pretty chuffed about!)
I don't trade anywhere nearly as much as I did, and my position sizing is far better.
My drawdown is 4%, but is a far cry from the 61% when I first began.
Currently sitting at +3% (5.3% this year)


7 days out from completing my 2nd year of trading.
Still a work in progress...

Myfxbook: https://www.myfxbook.com/community/trading-systems/post-beginner/1674155,1

 

[robiul]

I presume you've not had an answer in light of the fact that your OP suggests that you will examine it - so we're all holding up with goaded breath to hear what you need to state!

 

[Nowler]

Yeah, I didnt mean to imply that
Ive edited my wording

 

[hatemypips]

Anyone?

Risk of ruin in this case simply says how many consecutive losing trades need to occur to wipe x % of your account equity. What don't you understand?

 

[Nowler]

Risk of ruin in this case simply says how many consecutive losing trades need to occur to wipe x % of your account equity. What don't you understand?

Hi

I originally posted this in November of '17.
At the time I was only trading a few months and was hoping that I could be a fly on the wall while others discussed RoR, and risk management in general.

I understand what it means now.
Though I'm always up for listening to others speak about risk, and how to manage it

 

[hatemypips]

Hi

I originally posted this in November of '17.
At the time I was only trading a few months and was hoping that I could be a fly on the wall while others discussed RoR, and risk management in general.

I understand what it means now.
Though I'm always up for listening to others speak about risk, and how to manage it

Oh sorry I overlooked the post date. It is forgivable to ask such questions after a couple months of experience.