I took a hit on Jan 27, but two things stand out:
(1) I had my second largest positive day just 3 days prior
(2) I look at this scenario as I do with ‘explainable’ drawdowns.
As is always said, your worst drawdown is always ahead of you. There will be some black swan that gives you a slap across the face. Some in this forum felt that in March last year. Several had drawdowns well beyond their tested metrics.
However, it is explainable. In other words its not a system design fault. In theory, if that is the case, then once that ‘event’ has run its course, the system should return to its normal return profile.
The fact that you have now gone through the experience, it would be silly to stop trading the system because for all intents it will get back to normal.
Can you avoid these in the future? Probably not. The meme stocks has been something never experienced before, but now it’s a known known, its unlikely to have a huge impact as its done in the last few weeks. Also consider the idiots taking part lost a huge proportion of their money and that exchanges/brokers/regulator have stepped in to curb it happening again – at least in the format we’ve witnessed.
#next1000trades
Nick
