Managed Futures Archives • Futures Day Trading Strategies

Posts in Category: managed futures

10 tips to potentially help you survive the next Drawdown

 

Drawdown is a Reality of Every Trader

Being able to deal with and understand drawdowns are among the most important concepts in trading and in the life of a futures trader. Misinterpreting drawdowns lead to wrong assumptions and decisions that not only may result in larger drawdowns, but can even mean the “end” of a trading account.

Conventional drawdown parameters and risk metrics such as the Sharpe and Sortino ratio may add value when it comes to understanding one’s own performance. However, we think that on their own, they are not sufficient to understand drawdowns and you may require the understanding of additional concepts to fully appreciate the positive and the negative of your own style, and/or the analysis of an automated system or a managed account run by a commodity trading adviser.

A good starting point is the so-called ‘peak to valley’ drawdown metrics where a trader analyses the largest drawdown periods

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Overall Return on Investment: Is it the bottom line, or is there more to it?

 

An investor looking to diversify their portfolio may quickly become overwhelmed with the virtually limitless number of investment opportunities available to them. Simply narrowing down these options can prove to be quite time-consuming, and impatient investors usually end up quickly filtering out different investments based on the overall return. However, the truth is that overall returns represent only a fraction of the entire story, and taking the time to look beneath the surface of a CTA, automated system, or even a self-developed discretionary system can unearth risks that may have not been prevalent when searching based on the end result. No matter what option is chosen, it is important to note there is more than just a financial impact— there is also a deep psychological impact that can affect an investor in their day-to-day life. Let’s take a look at some different variables to keep in mind:

• What type of

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