Drawdown

FAQ about drawdown

1. So why do some signals go into drawdown?
Buying – because the signal is predictive , on my past experience maximum drawdown from this signal is 200 pip [quite scarry huh ?], often times the signal will trigger when it sees that the “market” is starting to buy or will start buying the EUR/USD.

Its Quite simply, many times buying or Long position the EUR/USD will cause the market to initially go in the opposite direction. On the retail side, a retail broker will take the opposite side of trades being taken – so, if retail [like me ] traders are loading up on euro longs [buying euro], the brokers are loading up on euro shorts [selling euro] to push the market against those trades to either shake them out of the trade or to trigger stoplosses. :)

2. What causes the EUR/USD to drop or correct?
Profit taking and Loss taking from institutional trader
Currency reserve moves
Stop hunting/stoploss triggering
Fundamental

Conclusion

I do want to be clear about one thing – I absolutely, positively take losses on trades.