No matter how good you are in your risk assessment game and how much time you have spent in your trading account there is always a risk that you are going to come face to face with the most feared creature of the markets – drawdown.
And the things about a drawdown – just like misery it loves company.
And what is the best friend of a drawdown – that is right – a losing streak.
Those two words are probably the most feared and the most banned in the whole of the forex market.
You are not supposed to think about it and talk about it until the damned day it comes. It is only when it comes you are supposed to start doing stuff – I prefer to lie down in the embryo pose and cry myself to sleep in situations like that.
So, drawdown is a reduction of one’s capital as a result of a losing streak.
When bad luck comes even professional traders can’t do anything. They just roll on with the markets. and yes, sometimes it results in losses as high as 50 percent of their account. Of course they are pros and they can earn that money back, but my point is somewhere else.
It is in the fact that no matter how good your risk management skills are there is no guarantee that you are going to always be successful. A lot of your trading is dependent on luck. That is the fact.