I see it the same way, there is simply no upside down losing for him, not with losing subscriber base, maybe not with losing other trading chances, and I know about one...Originally Posted by ;
What one should learn from this, as a trader, or as an investor?
Everything is more likely to collapse. The best traders possess.
One thing that - maybe- a prior stat can not predict.
Technical or plogical reasons, really greatest thing.
A trader can use some sort of stop, preferable maybe some automatic one, that takes decision some stage from his hands, when emotions inclined to run large, and the temptation to over ride the initial loss limits is likely. Yes, traders are people, and not without weakness. But knowing and accepting those, opens up a chance to prepare for them.
Never a secret I like equity SL.
Can define risk tolerance and can place things that at that point an EA or script take the decision from me, and shut all.
Admit, because trader has a chance to tamper this, it is not 100% fail proof, but usually when there is some discipline, there will be less chance to modify on the fly. Also it's the trader's fund, right?
Investors standpoint is different.
He does not have most of the time the same insight into trading. See a position on, but maybe not always understand the expectations on it, or why it started.
Have a promise in the trader he follows about low drawdown, but what that number may be? Who can tell, actually?
Well, the investor needs to be able to tell!!
And can, by so often investor is just as much a gambler than the trader he subscribe to!
And idle, most investors are idle!! They can execute that equity SL!!! And define their risk and reduction tolerance. Plus powerful take out the decision making at some stage from the trader's hand. In the end, the trader can recuperate, and they stuck in a reduction vs a profit in a stage, however better losing 10-20% of capital, than being down -40-80% and top of the emotional rollercoaster, with the only things left is a prayer not to die and crash, but with less and less rational means to prevent this stage.
The dice has been cast!
There is a middle ground of course, some trade copiers, or PAMM accounts will let both parties to define and set this risk sum, $ or % equity. It is a must if one truelly size, or an investor, maybe not few 1000s.
Cos traders that he plogical. A fact. Many had lost his head, the truth is I think most probably anybody who deals has expertise.
Best you can do is prepare for it.
I know I do the same way, using equity SL script, so, on primary account when I'm slow, or hesitant, or stubborn to close a transaction, it's my risk, however any other connected account will automatically implement an equity SL, and I'm disciplined enough for this to not tinker those setups.
Reduction is part of trading and it occurs all the time!
But one can and should have the ability to define the maximum!!!
Traders and investors alike!
Happy trading!