Maximum risk on the strategy

What should be the maximum draw down in the strategy? how much percentage will be best to trade again if the drawdown hits?

Can we discuss in detail?

I feel the drawdown should not be more than 25-30%. The less is the better. Generally for intraday strategy the drawdown should be less than 10%. For positional it can be upto 25-30%.

Suri sir,

are you telling for a single wrong entry? or continuos wrong entries?

Professional Trader

I have posted an image for you.This is for the total account.It just provides the percentage you require to recover your losses.
The decision now lies with you.
:thumb:

On single wrong entry the drawdown should not be more than 1-2 % and on continuous wrong entries, it should not be more than 15-20 % ,because above 30% DD it is very difficult to come back quickly in the game.Also after 25-30 % DD it is psychologically taxing to take the next trade with same comfort level as before.

Smart_trade

Hello,

Professional Trader,

He is talking about Max.Drawdown that would be happened if u faces series of losses.

There are various types of Risk-managemet techniques that u can incorporate in ur methods/system.

Normally any professional trader design his Risk-management techniques according to his Objectives and goals that he/she is going to achieve...See these things depend on ur Psychology and trading system/method.....IMO Defensive approach is best in trading when Comes to Risk-management...

My way of approach....

1)No allocation of capital more than 25% in a Single Trade or Risk of 2% on total Equity(including Brokerage)....which ever is lesser i approach that.

2)My method of risk control is autamatic..i.e when in a drawdown period its reduces risk automatically and increase the risk when trades are in my favour

3)Exit are the main part when comes to risk-managemet effectively...these can reduce or increase ur drawdown...and if u design exits carefully u can always be in comfort zone regarding drawdown.

Regards,

Thanks for the detailed explanation by all friends and moderator.

I am clear now.

i am trading crude oil. (intraday + positional)

As-per basic Risk-reward can we trade 2 lots with 1 L capital.

But i am also facing Consecutive loss (Min 10 times/year)

Santhosh,

Thanks for your reply.

Great work and information in crude has been given by you

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