A trader starts to think “I wonder when I’ll get back to a new equity high in stock market,, or even if I’ll get back up to a new equity high. By properly sizing your trading account you take an important step toward minimizing your risk even before you make the first trade in stock market.” It’s like inadvertently getting on the down elevator in a sky rise; you don’t know how long it will be before you get back to the floor you were just on.
Or even worse, if you really had no idea what to expect in terms of drawdowns in stock market when you started out, and you suddenly find yourself deep in the hole in stock market. The China Car Elevators Factory longer a drawdown lasts and the deeper it cuts into your equity the more painful it becomes. It is when losses start to mount that doubt creeps. Following the steps in Section Two can give you some ideaas to what you can realistically expect from your trading approach, both in terms of profitability and drawdown as a percentage of your trading capital.