Big drawdowns create drama | stockbee


Big drawdowns create drama

Some people are looking to make big money. Some people are interested in big drama. Those who want big drama like the second kind of graph.

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They try and swing for fences, blow up and then again go up. Their need for drama is more important than need for profits.
Objective of trading for me  is to make explosive profit and keep it. The objective is not to ride a roller coaster. Personally I want smooth returns without much drawdown and without aggressively using margin. 

To have good  returns with minimum drawdowns you need to approach trading problem differently. One of the reason why most traders ultimately become swing trader (this has happened for 100 year or more) is to manage drawdowns.
Swing trading concept is based on avoiding drawdowns and yet capturing the fat part of the move.
Swing trading is a template for extracting money out of the market with small drawdowns. If you marry swing trading with momentum you can get explosive returns. If you marry swing trading with growth investing you can get explosive returns. If you marry swing trading with value investing you can get explosive returns.


Ken said...

Enjoying the blog. I am curious to know what range of incomes you've made as a swing trader over the years. Obviously that is a personal question. If you aren't comfortable answering that I would like to know what you believe is possible to earn as a competent individual trader? Also, at what dollar amount do you think performance starts to drop off substantially

Pradeep Bonde said...


I have made hundreds of thousand trading in last 10 years.

If you are competent trader you can shoot for 50% plus or higher. Last year I was up 90% and this year as of today up around 75%.

As your account size increases you can use filter to only take high liquidity stocks. For example I look for 25 million plus dollar volume liquidity.