In back tests you’re unlikely to pick up the worst possible eventuality and so most times a forex trading course will counsel at least doubling the drawdown that you find. In this situation that would come to 70% so the account would survive. However, if a run three times as bad occurred, our account would be wiped out. Whether things are likely to be this bad relies on how inclusive the back testing was and whether it covered a stable or an unstable period in the market. Reduce that, either by moving the stop loss or reducing the number or size of lots, and you will scale back the losses during the bad run. Naturally you may also reduce profits that way but there’s no point taking large hazards to make enormous profits if the result will be that sooner or later your profits and your original investment is wiped out. It is better to make smaller profits but keep on profiting and always get over the bad times. This forex trading course article helped you do that with the concept of drawdown.
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