Hello, dear investors.
Do not worry. Everything is under control. Everything all right. Drawdown is a normal case when trading on financial markets. Earlier, I wrote that the maximum drawdown on Darwin can presumably be up to 20-25% and the maximum weekly drawdown is about 10%. Everything is within normal limits. It is necessary to take into account that it is impossible to show profit every month and it is ideal to grow up smoothly. Now there is a maximum drawdown for Darwin, but not the maximum for the underlying strategy. The worst-case scenario has occurred for most positions during the month.
Now I’ll try to describe in more detail about trading during the month. I’ll be honest with you.
In General, the system’s signals performed poorly in February and partially in January. There were a lot of stop losses, and most of the hedging profitable positions were closed at breakeven, except for the long USDJPY. The option analysis was practically not working.
At the end of January, a long EURUSD position was opened on the system (Yes, countertrend, this is normal), a small part of this position of 18% was fixed on January 31, the rest remained on the continuation of the trend until the next take profits. Since February 1, I have added another trade to the long on the system. However the expected movement ended and the asset has followed long-term downward trend, probably due to poor statistics in the Eurozone and Germany. The positive floating result of about +1.5% closed with a loss of about -1.5%, so the result for January is positive. However, in early February, the floating profit turned into a stop, according to Darwin it is about (-2-3%).
After that, on January 2, a good GBPUSD short position was opened in the medium-term market with the volume added on February 13-14. After 3 weeks of holding, I closed the entire position GBPUSD +0.7% with my hands on January 19 due to the uncertainty I expected on the asset and the squeeze between support and resistance with volumes under price. Unfortunately, after that, the asset fell sharply and part of the position could be closed by take profit, approximately + 3-6%.
About half of the loss is in gold. In the middle of the month, GOLD short positions were opened by the system, which I then closed at a loss after changing the trend by zones. Last week, on January 17-21, I had the idea to short GOLD from the historical 7-year highs using an additional filter and then, after a correction, buy it using the main signal. This was a very bad idea. I admit it. This is my biggest mistake for all the time of asset management - to short GOLD countertrend in the current situation. The deterioration of the coronavirus situation has alarmed the market. This triggered a drop in the stock market and a sharp rise in GOLD as a protective asset. On January 20-21, I re-entered the short 2 times, but I could not buy it, because there was no necessary correction in the system. Part of the position was moved through the weekend and at the opening of the market on February 24, closed at the stop of 1654 with a 50-point slip (due to the GAP), closed at 1659 with a large divergence. The only correct solution in this situation was to stay out of the market.
I am calm about the current drawdown and I do not worry about it, I understand that this is normal, everyone has drawdowns. But I am sorry for the quality of trading on some positions over the past month. I am sure that in the future there will be good profitable signals on the system and profitable periods will come.
About divergence and a little analysis.
Taking into account the large capitalization, I always tried to reduce divergence, divide one position into several orders, go for more liquid assets, do not trade oil, follow the recommendations of Darwinex support for limiting the maximum capacity and possible trades. I analyzed all this and realized that to some extent it affected my trading. I used to go more frequently on short-term positions, for example 30 take profits points (15 stop points), this is normal. The main thing is the risk from stop-loss and the risk-profit ratio. At the same time, the risk per trade could be 1%, but the volume was large in lots, since the stop loss is short. Now and for the last half of the year, I almost do not open into such trades, since this is impossible due to the large volume of each trades. This would cause even more divergence. I tried to take more distant goals with longer stops, so that the volume in lots was less, but the ratio is also. However, this reduces the probability of achieving the goal. Increased situation when a profitable position left at a loss before the take profit. Also, two other factors have a strong influence on divergence: this is the work on any commodity assets(for example, GOLD) from the words of the company’s support due to low liquidity, although it is possible to trade on gold. For gold, for example, I open the volume of 0.01 for 3000-4000$, this is a very low volume and still it caused a high divergence. Second: I open a position with several trades, it is less than 0.01 lots per 1000$, sometimes even several times. At the same time, the stop-loss is objectively single! And if a trade is closed by a stop loss, then some trades are closed with more divergence than others. There’s nothing to change, different stops are wrong.
So far, my solution is to exclude or minimize work on any commodity assets, including GOLD. For the most part, I will work on the most liquid assets and more often I will work in the short term. I will also think about working on liquid cross pairs. Then it depends on Darwinex support, I hope they can divide the volume of positions between different liquidity providers or improve the system. Now this is a feature of the platform, and I am doing everything possible to reduce the divergence.
The ability of the managing trader not only to show a good stable profit, but also to correctly fix and accept losses, as well as the ability to get out of drawdowns or force majeure situations in compliance with risk management. Ability to show high-quality trading. I will demonstrate this.
Now there is only a small position on GBPUSD and AUDUSD.
I’m not worried about the current drawdown. It will not affect any further trades.
I will continue to work according to the system and I am sure there will be profitable periods. Darwin will be recover gradually over the course of a year, with no exact date. I may be able to recover within a few months, a half-year or even earlier.
I hope for your understanding. Thank you for your trust. All the best.
I’m not coming to the forum anytime soon.