Are you sure you understand all the risks in systematic trading?

Just to reiterate, this is not investment advice.  I’m only sharing what I’m doing personally, which doesn’t mean you should invest or trade like I do.  Please read the disclaimer below.

If you use any kind of trend following strategy, when trading futures, you’re going to have drawdowns.  There’s no question about it and no way around it (and anyone who tells you otherwise is probably lying through their teeth).

Having said that, if you understand and have faith in your long-term edge, you know that you have to keep trading through a drawdown.  The ability to handle yourself and your trading through a drawdown is what truly makes or breaks you as a trader.

In fact, the one thing that all the Market Wizards have in common is their ability to handle drawdowns, because when the bad period is over, you will more than make up for your losses.

But do you know that you’ll survive and handle your maximum drawdown when you’re trading?  Because you will have drawdowns, and the one critical thing you have to have is enough capital to keep trading.

I talk about this is in my latest video, and I have a link below to this awesome tool I found to help you understand your biggest risk in trading – which is running out of capital.

As promised, here is the link to the Monte Carlo Simulation I found that I used in the video.

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