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I don’t think anyone is really comfortable with 30% DD but you have to think of it in context…You have already stated that your backtest metrics are 15-20% CAGR and 20-25% MDD, which if you read any of the great Trend Follower’s books, is what they expect. There are sporadic times as you stated where it goes to 30%…also to be expected. But the important take away here is sporadic….The backtest has shown it will come back. Imagine your feelings when you look at the P&L and see it rising every day after the drawdown.
I think it’s important to remember that only novice traders think it is different this time…it isn’t. Human behaviour doesn’t change. The markets are not efficient. The drawdown will end, if your system is robust and simple.
The whole process of TF is just a constant win, lose, lose, lose, lose, win, lose, lose, lose… ad infinitum.
Think of your backtest when you are in a drawdown. Know that this is what is expected to happen, and press the button to place the next order.
Edit: Just read that back and it sounds a bit preachy…sorry not sorry
Hi Kate,
I’d enjoy having a chat, thanks for the extremely kind offer!
I have to admit though that I’m not sure that fear is such a bad thing. In so many aspects of life, it stops people doing dumbass things. It’s my understanding that this is why young men are more likely to injure or kill themselves, the two parts of the male brain don’t properly connect until we are in our twenties. In a trading sense, fear can be helpful to prevent taking too large/low probability risks. Like everything, I expect it’s having the right mix
But as I said, it would be great to have a chat because it seems like you have some pretty deep knowledge. My email address is
When you get a chance, perhaps you could email me and we can arrange a time for a catch up.
Thanks again,
Terry
October 2021
Another quiet month, although satisfactory in the circumstances, I guess (?).
MOC 1000 4.43%
MOC 2000 1.91%
MR 2000 (1.29%)Total 1.95%
My annual benchmark is 20%, so while this looks like a ‘blah’ month, 12 x this month’s return would meet my benchmark.
I have officially given up on longer term systems and have tipped the money I had set aside for these types into my short term systems, so now I’m finally fully invested after 20 months
I will keep looking for longer term approaches but just won’t be waiting for them to turn up.Good luck to everyone for November!
Terry
Terry Dunne wrote:Another quiet month, although satisfactory in the circumstances, I guess (?).My annual benchmark is 20%, so while this looks like a ‘blah’ month, 12 x this month’s return would meet my benchmark.
Similar line of thinking here Terry…. it feels like the last 6 months have been a bit “blah”.
I guess if we compare it to fishing, atm it just feels like our bait gets taken sometimes and other sometimes we catch a little ‘tiddler’ that we have to throw back, while we patiently wait for some decent bites/big catch to come along.
Hope all is tracking well on the health front.
Agree mate. At least people with longer term systems are getting some bang for their buck.
Thanks for the enquiry after my health. Me next big step is to see a spinal surgeon…whenever I think of surgeons, I’m reminded of that saying if the only thing your tool box is a hammer, everything looks like a nail
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