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Saturday, January 12, 2008

The Most "Un-Sexy" Investing Topic

"Un-sexy" investing topic? You bet. Money management is already considered boring. But within the subject of money management, there is a topic that is considered the most droll, un-flattering topic there is.

Drawdown.

Here's a short video describing what it is, and why you need to consider it.



Something else that should be mentioned when it comes to drawdown, is it helps you to understand the worth of a system. I've had people promoting a given methodology or system, and when I ask about drawdown? Their response was: "We don't have to worry about things like drawdown, as other systems do"

BBBBBBBBBBBBBBBBBBBBZZZZZZZZZZZZTTTTTTTTTT ! ! !

Wrong answer.

Everyone has to worry about drawdown.

If, on the other hand, someone offers a system, and they have no problems discussing it's drawdown, some statistics, as well as what markets the system generally performs best in? This is a clue that the system may have some merit, and be worth investigating.


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This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment advisor, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders

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