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Strategies & Market Trends : From the Trading Desk

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To: Christopher who wrote (2728)	3/20/1998 8:00:00 PM
From: DADDY WARBUCKS	Read Replies (1) of 4969

Christopher, Here is an example of drawdown. I start my trading with 10k. I immediately take it to 15k. Then take losses to 12k. My max drawdown is 3k. Then I trade up to 20k. Unfortunately I take losses back down to 15k. My new max drawdown is 5k. The theory is: If I start trading a system at the end of a long winning streak and it repeats its worst trading period, what would be my maximum loss. Keep in mind, max drawdowns can and mostly will get larger as time goes on. Due to increased volatility of todays' markets compared to history. Hope I didn't confuse you. Daddy

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