In back tests you are unlikely to pick up the worst possible eventuality and so most times a foreign exchange trading course will recommend at least doubling the drawdown that you find. In this case that would come to 70% so the account would survive. If a run 3 times as bad happened, our account would be wiped out. Whether things are probably going to be this bad relies on how inclusive the back testing was and whether it covered a stable or an unstable period in the market.

So having done a calculation like this, you might take a different view of what your risk per trade should be. Clearly the % losses during that bad run are going to depend on how much was lost per trade. Reduce that, either by moving the stop loss or reducing the number or size of lots, and you may scale back the losses in the bad run. Naturally you will also reduce profits that way but there is no point taking big hazards to make enormous profits if the result will be that eventually all your profits plus your original investment is wiped out. It is better to make smaller profits but keep on profiting and always recover from the bad times.

So the way to respond to losses is to grasp what to expect. This forex trading course article helped you do that with the concept of drawdown.

Tags: currency trading, expert advisor, forex robot, forex strategy, forex trading

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