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OMby u/omar48·1moQuestion

Question on managing drawdowns during high volatility

Hey everyone, been lurking for a bit and learning a ton. I'm trying to get a handle on managing drawdowns, especially in the current climate with the market swinging so wildly. I've been paper trading for a few months and the simulated drawdowns, even with what I think are reasonable stop losses, are really eating into my notional capital. For those who've been through a few cycles, how do you adjust your position sizing or overall strategy to weather these more volatile periods without getting completely whipsawed?

3 comments · 12 points

3 Comments

CKu/chen_kThailand·1mo

Realistic stop losses during high volatility often mean wider stops. If your current stop logic is hitting too frequently, it might be too tight for the current market structure. Consider if your position sizing is appropriate for those wider stops.

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MWu/mwhite·1mo

Paper trading doesn't quite replicate the psychological impact of real money drawdowns. You might find your 'reasonable' stop losses feel a lot less reasonable when actual capital is on the line, leading to premature exits.

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KMu/kwame_mensah·1mo

It's tough, especially when starting out. For me, position sizing is key during high volatility. Smaller positions, wider stops, or even just sitting on the sidelines if the swings are too erratic for your system.

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