IndexTrader™ Drawdown
Analysis
SPI
• NIKKEI • TAIWAN •
HANG SENG
DAX • FTSE • E-Mini S&P500
Drawdowns refer to declines in profits before new equity highs are made. Drawdowns are primarily made up of consecutive losses with a few wins interspersed. This page is designed to give Traders an idea of the likely adverse drawdown conditions they should expect when trading IndexTrader™ across the above portfolio of markets. I firmly believe trading well is all about risk management and survival. Accordingly this page is designed to assist Traders in determining the level of risk they should expect to experience while trading IndexTrader's™ signals. Please take some time reviewing the following hypothetical metrics and historical drawdown and duration charts. These metrics commence from March 1992.
Following the charts I'll summarise the key message to take away.
Last updated: 15th April, 2005.
IndexTrader's™ Drawdown Key Message
I believe the key
message to understand here is that for the majority of time (63%) Traders should expect to be in drawdown. For
two-thirds of their drawdowns they should expect to suffer losses up to
-$4,755
that will last for at least 112 days.
At the extremes Traders should expect to experience 15 or more consecutive losing trades, suffer a drawdown equal to and greater than -$16,470 and not make new profits for up to 501 days.
If Traders can study and accept these drawdown metrics they'll be well positioned and prepared to trade IndexTrader™ through both the good and bad times.
Warning
These performance and
drawdown figures are hypothetical only, showing the results of trading 1
contract per IndexTrader™ signal. Traders need to determine, with or without the
assistance of a
licensed financial adviser as to whether the trading opportunities identified by
IndexTrader™ are appropriate for them given their particular needs, financial
situation and investment objectives. Traders also need to be very aware
there is RISK of loss in futures trading. Hypothetical, historic or actual
results do not indicate future success.