Friday, July 12, 2013

Equity curve update

Following on from suffering the big gap down on a single trade (refer to this post), the equity curve moved south as well. The chart as of tonight is shown below.

While it is always frustrating to suffer a loss on a single trade that is bigger than anticipated,  it is accepted that these events can and do happen. These kind of gaps and drawdowns have happened to the best of them.All they do is reinforce the need for proper risk management.

If you are able to control your risk, and avoid trading too large a position, then you are ahead of the majority of traders around the world. Combine that with entry and exit rules that generate a positive expectancy, and then trades such as these need to be put of your mind. You need to focus on the job ahead.

What you must avoid at all costs is the urge to make the money back as quickly as possible - you need to focus on the same things that have produced the results up to that point. Namely good risk control and sticking to your system rules.

All I can console myself with is that I have a number of positions which remain open. Some have small losses, others small profits, with a couple showing decent profits - so it is business as usual in a trend following world.

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