How much DrawDown is acceptable?

  • updated

Newbee EA question.

I know it is up to someone's risk appetite  but I would like to hear your opinion on this.

How much DD should I target while backtesting?

Ulises Cune

I think between 20%-30% is fine. 10%-20% is very good, but difficult to maintain for a long time. 50-60% is very risky.

Christoph Trautwein

You are touching the core being successful log term. Unfortunately it is not so easy to answer your question and I am searching for good studies as well. I think you have to make a statistic of DDs. You will see low DDs for short time frames, but you will see 100% DD when making your time horizont large enough. So how to deal with this?

On long term you will be bankrupt. On short term you can increase risk.

My current startegy is to withdraw on a regular basis and save money for the time I have a 100% DD.

Your question remains: What DD and what withdrawal should you aim for? I think it depends on the distribution of DDs your strategy has.

Please critizise my idea.