Drawdown recovery: rebuild on execution, not on getting it back
The instinct in a drawdown is to size up, because the hole is measured in money. That is the one move that turns a drawdown into a crisis.
Is this you?
- —You are sizing by what the account needs, not by the setup.
- —You track how far you are from your old high daily.
- —You have widened what counts as a setup.
- —You feel like you cannot afford a normal-sized loss.
Two or more of those and this is the state costing you the most, not the strategy.
What it actually costs
Recovery attempts fail on sizing, not on analysis. A trader in a hole who raises size converts normal variance into an account-ending run, and the state that caused the hole is still driving.
The protocol: The Ladder Back
Trigger — Your account is down more than your pre-defined drawdown line — commonly 10 percent.
- 1.Cut to 25 percent of normal size today. Not tomorrow.
- 2.Define the gate: ten trades executed to plan, regardless of P&L. Execution is what you are grading.
- 3.After ten clean trades, move to 50 percent size. Another ten clean trades moves you to 75, then 100.
How long — As long as it takes — usually two to six weeks.
Read the full protocol, success test and what to do if it fails →Do this in your next session
Set your size at a quarter and define the rung ladder in writing. Two consecutively scored clean sessions move you up one rung; one broken rule moves you back down. The account is not consulted.
Not sure this is your state?
The quiz takes two minutes, needs no sign-up, and names your top three protocols out of the fourteen.
Keep reading
Work it through with the Coach
Describe your last bad trade. It names the state, picks the protocol and gives you the exercise to run before the next session. Free to use.