The Recovery Roadmap

Use this step by step process to help recover from drawdown

Recovering from Drawdown

You’ve had a bad spell, your equity curve looks like cr*p and you’re wondering what to do…

Don’t panic. No need to make rash decisions. There’s a process you can deploy.  

Find out what’s causing the problem…

  1. Do you have a trading plan?

    If not, build one so you have a framework to follow. If yes, go to the next step.

  2. Did you follow the plan?

    If no, then it’s time to give 100% focus to your discipline, the best plan means nothing if you can’t stick to it. If yes, go to the next step.

  3. Is your strategy clear?

    Maybe you have a plan, but there’s too much ambiguity. If no, then tidy up your strategy rules. If yes, go to the next step.

  4. Do you have a big enough sample size?

    You can’t get disheartened over a few trades not working. Even the best strategies have lots of losers.

    Do you have enough trades? If no, carry on, reduce size if you need to. If yes, go to the next step.

  1. Last step – if you’ve got this far then you have a plan, your discipline is on point, your strategy is clear, and you have a decent sample size.

    Now you have either strategy or market condition issues.

    Check the market conditions, are they very different to what you are used to? Are we suddenly trending after being range-bound for months and you’re still deploying the same strategy?

    Do we have narrower ranges? Is it a seasonal thing?

    Then review your strategy.

    Maybe the edge has gone. Sometimes really effective strategies just stop working. And you simply need to tuck them away into a drawer for another day. They nearly always come back.

Ok, that’s the process…

I’ve simplified it into one email, but hopefully, you get the idea.

A logical, clear, step-by-step roadmap for getting yourself out of a slump makes all the difference to your mindset.

Steal mine or create your own.