Money Management: Drawdown
Tuesday, March 9th, 2010
The Blog Entry that Accompanies this Vlog Entry is at: http://investorandtrader.blogspot.com/2008/11/money-management-drawdown_10.html
My Daily Blog is at: http://investorandtrader.blogspot.com/
My channel at BlogTV is: http://www.blogtv.com/People/Airelon
Why keep track of your drawdown? After all, we just want to trade right? You just want to focus in on the reward, whether it be from the Forex, Commodity Futures, or Stock Markets, right?
Drawdown assists you in understanding the worth of a system or method as well. If the person offering the system refuses to talk about the drawdown numbers of that system? That’s a good indication it’s a scam and highly overrated. If the person offers you a system or methodology and talks about drawdown – this lets you know that the system has verifiable merit that you can test.
But what does drawdown tell you about your system, and how you should adjust the rest of your money management strategy?
We discuss that in the following vlog entry …
NOTE: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research and risk tolerance. Included Music is by Paul Young. A personal friend and is not a part of any music license, recording label, etc
Duration : 0:9:34
The Blog Entry that Accompanies this Video is at: http://investorandtrader.blogspot.com/2008/11/money-management-risk-analysis.html
Risk & Money Management are very important, if not the most important issues that must always be addressed by anyone seriously considering trading the Markets. They cater for the preservation of both your Initial & Accumulated Trading Capital. You may already have a great system or set of rules to determine what to buy but if your method of Money Management is clumsy, you will lose money, unnecessarily! Once buying that share your role is no longer as a Trader or investor but a Risk Manager. At some point in time your trading system will meet a draw down period (losing streak) and if you don’t know what to do, you will lose your feeling of control and try to desperately trade your way out of this crisis. Many people feel despondent and abandon a perfectly good trading system, or give up trading altogether with large profits still to be made. As a Trader or Investor, you’re destined to fail without proven Risk / Money Management rules. Managing the Capital in your trading account, controlling the risk it’s exposed to, the size of each trade, together with exit strategies are all pre-requisites of any Money/Risk Management System and successful trading. All these issues and more are covered with JBL Risk Manager. Short Selling now also included in trial. Now also available: Multiple Portfolios, Stock Split Adjustments, preset Brokerage fees including % and provision to select either short or medium term trading or long term investing. 14 day FREE evaluation now available. Trial the program today at http://www.paconsulting.net.au/Share-Trading-Investing-FX/jbl-risk-manager/
http://www.LNCO.org Part 2 of Money Management 101 Series. Learn: Budgeting, Tax Reduction Strategies, Advantages of Business Ownership, Biblical Principles…