In today’s webinar, we discussed the unavoidable drawdown that we all go through periodically. It’s part of trading, but there are ways to best manage them and help yourself get out of them faster. There are two types of drawdowns – ‘normal’ and ‘problematic’.
Normal drawdowns occur as a natural function of the ups and downs of trading related to market conditions and slight deviations away from our trading plans. These aren’t perceived as threatening, but must be managed to avoid becoming damaging drawdowns which hurt not only our trading accounts, but psyche as well.
There are measures we can take to manage normal drawdowns to prevent us from digging into a hole which sets us back for extended periods of time. It’s not just about money management, but making sure we are following the process of trading in proper fashion.
Problematic drawdowns happen, but should be infrequent. They aren’t the end of the world. When handled properly, a trader can fast-track themselves back to ‘business as usual’. Today we discussed important measures to take to help make this a less painful process.
For full details, please see the video above. Looking for trading ideas? Check out the DailyFX Trading Guides page.
---Written by Paul Robinson, Market Analyst
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