11/9/2023 0 Comments Drawdown in forexWhen a forex trader has a drawdown, the best options are to readjust his system and implement reasonable risk-management procedures instead of trading aggressively to recover his breakeven point. To secure his equity position from breaking, he must get a 100% profit on the remaining capital. Your position may not be defendable if your drawdown is significant.įor instance, an investor has to work hard to recover his capital loss if his drawdown is 50%. ![]() Performance Metric: While many traders focus primarily on returns, understanding drawdowns gives a more holistic view of performance, combining profit potential and risk.Ī drawdown also helps you know how long your trading system can survive in the forex market. ![]() A system with a lower drawdown may be preferable over one with higher returns but a significantly higher drawdown.
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