How to Handle Drawdowns Effectively .. A Complete Guide and previous History ..
Many traders often wonder how to manage drawdowns and limit their losses during volatile markets. Here’s an approach that has worked well, explained in simple terms:
Since 2021, my trading strategy has focused on maintaining smaller position sizes, usually around 15% to 35% of my total portfolio. Rarely did I go beyond 40%, which helped me minimize risk during uncertain times. By keeping the majority of my capital unused, I always had enough funds to act when opportunities arose.
During significant market drops, instead of panicking, I used the available funds to gradually increase my position. This meant using light leverage and carefully investing in coins that were undervalued after the crash. This strategy worked like picking up discounted assets when others were selling in fear, allowing me to turn short-term chaos into long-term gains.
In 2022, most of my profits came from exploiting unique opportunities, such as the LUNA arbitrage. By identifying price differences between exchanges during its downfall, I managed to generate consistent profits despite the broader market crash.
The key to managing drawdowns is discipline and patience. Avoid going all-in, always keep reserves, and learn to recognize opportunities even during downturns. With a controlled and well-thought-out approach, you can recover losses and turn market volatility into a winning game plan.
This method has proven effective for me, and I hope it gives you a clearer understanding of how to control drawdowns while staying profitable..