The Trading Strategy for sale

The Scalper with a ten-year history:

  • Income for 10 years
  •   1560.93%;
  • The average annual income
  •   156.09%;
  • Maximal drawdown
  •   22.83%.
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PAMM Account Assessment Criteria: Drawdown Level

Drawdown is a term that is used in the Forex market to describe the amount of money that an account could lose after a streak of losing trades. Drawdown is often used to measure the money-making potential of a system that is used for trading the Forex market.

How reliable Drawdown criterion is?

Having defined the level of possible drawdown one can define a transaction-deposit ratio. The deeper drawdown is the more careful one should be to invested capital. If the drawdown is insufficient, even small investment can make lucrative income. There are two reasons why it is important to define the level of acceptable drawdown. First of all, it isn’t possible to calculate how long the unfavorable period of trading strategy will last. The next unfavorable period won’t be obligatory the same as the previous one. So, the analysis of previous drawdowns results nothing as the factors influence trading process in different ways. The drawdown level can’t be the basis for PAMM choosing, as it adds nothing to unfavorable period forecasting.

Trusting PAMM: what draws attention?

Drawdown leveling is important, but risk-profit ratio is more important. Though, it is another calculating of future strategy performance. No one can foresee it, as completely different factors may influence market condition and price fluctuation. Managers are supposed to stop trading if drawdown reaches some definite level as it indicates that his trading strategy needs correction or risks haven’t met expectations. However, this is a subjective approach which doesn’t consider actual condition of the market. In this case, what should be taken into consideration? The number of months PAMM account can stand during strategy unfavorable period should definitely be. So you don’t risk losing all your capital within a short period and may withdraw money timely.