Good post by xray ...every trader must know this and ready for it
Draw down phase in traders life (Trend trader):
Trading is always easy ,but holding nerve when systems enters ugly draw down phase is the key factor,i have met lot of successful traders,there important trait in there trading is psychology to hold there nerve in DD phase, for me it took 5 long years to adopt that in positional trading,when ever there is some SL hit on account of gap i used to think intra is the best and remained in that for quite long period..Once intra+positional are added ,things changed dramatically.
Time factor :Many think long time frames does prevent noise ,but every time frame has its own whipsaw periods and time to recovery
Handling DD phase: (by the way this is for rule based system),first of all result from back test should show you the extent of damage it will case to trading capital ,i questioned my self can you handle this ,if answer is no ,we have to rearrange the system ,but any system will remain in that phase ,so handling that is only option.How you do that MM is only option..
Main mistake trader does is stop trading when this phase starts without giving importance to his back test results,thinking that lets market stabilize ,i will start again, there is no precise way or means which will tell you market stabilization factor
Trading all three (intra+positional+swing) helped me to offset one system loss with another at most and turned the table,but there are months when all the three turned into loss
Psy drill helped me to adopt all (intra+swing) handling in better way
Bottom line: We can cry when we lose ,but has to follow the system at any cost
Draw down phase in traders life (Trend trader):
Trading is always easy ,but holding nerve when systems enters ugly draw down phase is the key factor,i have met lot of successful traders,there important trait in there trading is psychology to hold there nerve in DD phase, for me it took 5 long years to adopt that in positional trading,when ever there is some SL hit on account of gap i used to think intra is the best and remained in that for quite long period..Once intra+positional are added ,things changed dramatically.
Time factor :Many think long time frames does prevent noise ,but every time frame has its own whipsaw periods and time to recovery
Handling DD phase: (by the way this is for rule based system),first of all result from back test should show you the extent of damage it will case to trading capital ,i questioned my self can you handle this ,if answer is no ,we have to rearrange the system ,but any system will remain in that phase ,so handling that is only option.How you do that MM is only option..
Main mistake trader does is stop trading when this phase starts without giving importance to his back test results,thinking that lets market stabilize ,i will start again, there is no precise way or means which will tell you market stabilization factor
Trading all three (intra+positional+swing) helped me to offset one system loss with another at most and turned the table,but there are months when all the three turned into loss
Psy drill helped me to adopt all (intra+swing) handling in better way
Bottom line: We can cry when we lose ,but has to follow the system at any cost
