Everyone fears it: The Drawdown. However there is nothing to fear. It is a very normal process.
Lets look at an example: The probability for an AA in Poker is 0,005%. Thats pretty slim. Its actually the same chance you have when you are trading with 50% probability of a win. And you get 7 looses in a row.
However everyone who plays Poker regulary has gotten the AA. So in that respect everyone who trades a lot had this bad luck of loosing 7 times in a row. And that is what many call a Drawdown.
It is normal, but also it can be dangerous. If you are not accepting that you will have a loosing-streak eventually you will get frustrated.
Traders who are frustrated do "Revengetrades". Trades to get their money back... and they loose even more!
Don't be that guy! Just go out with your dog or talk to your family. Forget the market for a while and when you get back it will be way easier.
That's my Tipp of the day.
Lets look at an example: The probability for an AA in Poker is 0,005%. Thats pretty slim. Its actually the same chance you have when you are trading with 50% probability of a win. And you get 7 looses in a row.
However everyone who plays Poker regulary has gotten the AA. So in that respect everyone who trades a lot had this bad luck of loosing 7 times in a row. And that is what many call a Drawdown.
It is normal, but also it can be dangerous. If you are not accepting that you will have a loosing-streak eventually you will get frustrated.
Traders who are frustrated do "Revengetrades". Trades to get their money back... and they loose even more!
Don't be that guy! Just go out with your dog or talk to your family. Forget the market for a while and when you get back it will be way easier.
That's my Tipp of the day.
