Dive Into the New Drawdown Feature: Understanding Your Trading Lows
We’re excited to introduce you to our latest dashboard widget - “Drawdown”.
It’s time to take a deep dive into what this awesome feature is all about and how it can help your trading!
So, you might be wondering, “What exactly is drawdown?” Well, imagine it as your friend that keeps track of the lowest points your account reaches over time before it recovers back to green!
How to Add the Drawdown Widget
Before we get into the nitty-gritty of what the drawdown widget does, let’s first talk about how to add it to your dashboard. Here’s how you do it:
Access Dashboard Editing: Head over to your dashboard and click on the “Edit widgets” button in the top right!
Edit Section: After clicking edit widgets you will have the option to edit 2 sections, select the bottom one!
Add Drawdown: Select “Drawdown” and organize it where you’d like it on your dashboard.
Done! Once you’re happy with your widget setup, simply hit “Done” and the drawdown widget is now part of your dashboard.
Now that you’ve got the drawdown widget on your dashboard, let’s dive into what it actually does.
Understanding the Drawdown Widget
The drawdown widget is your personal account historian, showcasing the lowest point your account has touched over time and where you’re at before you fully recover.
Let’s look at this scenario:
Today you had your first trade of the month and came out conquering, being up +$1,600. What is your drawdown at? Zero, because you’re green!
Now tomorrow approaches and you face a bit of a tough time in the market, and you lost -$1,500. That becomes your drawdown peak – the highest loss you’ve encountered this month. But don’t worry, it’s all part of the trading game.
Now let’s fast forward to the next day, you come back trying to make your loss back, which leads to another red day of -$900!
What is your drawdown at? $2,400. Why?
Because you have now lost $2,400 within the past 2 days ($1,500 + $900 = $2,400). Which means you now have to make back $2,400 before your drawdown is 0 again!
Moving on to Thursday, you had a great day of +$2,100. Not only are you now green on the week but this now puts your drawdown at -$300! You’re only $300 away from being at 0 again!
It’s now Friday, the last day of the week and you finish it off on a good note being up +$1,500 on the day. This now puts your drawdown back at $0 because you’ve covered the losses from Tuesday & Wednesday!
So there you have it, your drawdown widget doing its thing – keeping track of your trading lows in a simple & automated manner!
Why Drawdown Matters
Now you might be wondering, “Why should I care about this?” Well knowing your drawdown can provide valuable insights into your strategy:
Risk Management Comfortness: Understanding your drawdown helps you assess the level of risk you’re comfortable with. It’s like a safety net, reminding you to not go far beyond your average drawdown.
Evaluate your Performance: Is your strategy working? Is it time to adjust your approach? Your drawdown has the answers.
That’s a wrap! Remember trading is a thrilling adventure and drawdown is part of the game! Just focus on staying within your average drawdown instead of creating new ones 👀.