Amiga Anywhere

In back tests you are unlikely to pick up the worst possible eventuality and so most times a currency trading course will endorse at least doubling the drawdown that you find. In this example that would come to 70% so the account would survive. However, if a run three times as bad occurred, our account would be wiped out. Whether things are probably going to be this bad is dependent on how intensive the back testing was and whether it covered a stable or an unstable period in the market.

So having done a calculation like this, you may take a different view of what your risk per trade should be. Clearly the % losses during that bad run are going to be dependent on how much was lost per trade. It is better to make smaller profits but keep on profiting and always recover from the bad times. This foreign exchange trading course article helped you do that with the postulate of drawdown.