Experiencing Drawdowns

Markets are extremely volatile at the moment and are expected to remain so for the foreseeable future. If you missed my market commentary from last week you can watch the video here.

Many strategies are experiencing drawdowns in this environment. While these are never comfortable, they are an integral part of the trading process. I strongly believe the difference between those that are successful traders, and those that are not, is the ability to weather drawdowns when they come along.

Below is my personal equity growth vs the S&P 500 over the last 5 or 6 years. This equates to a 40% CAGR.

But here’s the thing; the equity growth ebbs and flows. Indeed, within this period I also suffered a 30% drawdown.

Yet I persisted. Without the ability to weather the storm, you won’t get the wanted results.

So how do I do it?

Well, I’ve developed a strong psychological fortitude to withstand the lean periods. And you can too.

Here’s a few links to articles I’ve written on the topic…

4 Ways to Trade Through Drawdowns

How to Handle Drawdowns

Drawdown Diagnosis – What’s Wrong with my Trading?

Chat with Traders – How to Power Through Losses and Continue Executing

I’ll leave you with one last snippet. You can’t control the market, but you can control how you participate in the market.
1. Bet small.
2. Play a good defense.
3. Diversify strategies.
4. Remain patient.

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