One Drawdown technique that can change your Trading Journey

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"Drawdown" is a critical concept every trader and investor must understand to succeed in the markets. 🚨 It's not just about how much you can earn; it's also about how much you can lose and recover from!
In this video, we’ll break down:
✔️ What is Drawdown?
✔️ How is it calculated?
✔️ Types of Drawdowns (Absolute, Relative, and Maximum).
✔️ Why Drawdown is more important than profit?
✔️ Strategies to manage and recover from drawdowns.
📊 Whether you're trading stocks, forex, or crypto, managing drawdowns can save your account from disaster and keep you in the game longer.
👉 Remember: Trading isn't about avoiding losses altogether; it’s about keeping your losses manageable.
What is Drawdown?
Drawdown refers to the reduction in an account's equity, typically expressed as a percentage, from its highest point (peak) to its lowest point (trough) during a specific period. It measures the extent of a trader’s losses before the account recovers.
Example: If your account grows to ₹1,00,000 but then drops to ₹80,000 before rising again, the drawdown is ₹20,000 or 20%.
How is Drawdown Calculated?
The formula for drawdown is:
Drawdown (%) = ((Peak Value - Trough Value) / Peak Value) × 100
Example:
Peak Value = ₹1,00,000
Trough Value = ₹80,000
Drawdown = ((1,00,000 - 80,000) / 1,00,000) × 100 = 20%
Types of Drawdowns
Absolute Drawdown: Measures the difference between the initial deposit and the account’s lowest point.
Useful for determining how much of the starting capital is at risk.
Relative Drawdown: Represents the percentage drop relative to the equity's highest peak.
Highlights the risk level of an account during growth.
Maximum Drawdown: The largest peak-to-trough decline in a trading account over a period.
Indicates the worst-case loss scenario for a trading strategy.
Why is Drawdown More Important Than Profit?
Risk Management: High drawdowns indicate higher risks. A 50% drawdown requires a 100% gain to recover!
Sustainability: A low drawdown ensures your account can survive long-term and handle market fluctuations.
Psychological Impact: Large drawdowns can affect decision-making, leading to emotional trading and further losses.
Strategies to Manage and Recover from Drawdowns
Position Sizing: Avoid risking more than 1-2% of your account on a single trade.
Stop-Loss Orders: Use tight stop-losses to limit potential losses.
Diversification: Spread your investments across assets to reduce exposure to individual risks.
Review Strategy: Analyze the trades causing drawdowns and adapt your strategy to market conditions.
Gradual Recovery: Focus on small, consistent wins rather than aggressive high-risk trades to recover.
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[@Lionforge2]

how to manage risk that not told u.. i am 50% drawdown from peak allready how to manage it.should i reduce risk or what

[@30CAGR]

Reduce positions...