Currently while I'm trading on a $216 account, it seems like I'm making lots of gains (12% per trade) with crazy drawdowns (33% per trade). This is however inevitable given the small capital to begin with.
My long term goal is really to keep it to a low max drawdown. This means that using my existing strategy, I'll need a $3,600 account for a 2% drawdown. Definitely something I'm willing to fork out.
However by starting small with $216, it gives me an opportunity to make the same absolute profit, without forking out all $3,600 at once! This just means that each time my drawn down goes below $216, I should top up my account, in order to continue trading the same lot size, in order for the strategy to fully pan out.
So actually I'm not that crazy after all :)
This means that while my strategy would gain me 400% in a year (assuming I don't have to ever top up), this would only be for the first year. The ultimate aim is to have a low maximum draw down. Based on my current strategy of making about 800 pips a year, this would mean a 14.5% return for every 1% risk I take per trade i.e.
1% drawdown = 14.5% returns a year
2% drawdown = 29% returns a year
3% drawdown = 43.5% returns a year
4% drawndown = 58% returns a year
I think 58% is decent. This will be the ultimate aim and vision. So let's see if I can get there without having use too much of my own capital, i.e. trade off pure profits. Trade safe!
Yours,
X
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