Autotrading drawdown limits

I wonder if anyone would find it useful to have a ‘maximum drawdown allowable’ feature for autotrading a system. The way it might work is when you set up trading for a system, you specify the maximum % DD you are willing to tolerate for that system. When this limit is reached, trading for that system is shut down automatically.

I do check system performance on a daily basis, however shite happens and any one of us could be incapacitated. Stops in any market are no guarantee of exiting a position and some vendors (baffling as it may be) trade without any stops. Such a feature in C2 would give some peace of mind.

I think we were already discussing this in the thread Lessons from Positive Forex. The only problem is what ST pointed out, that it changes your risk profile in an unpredictable manner when you trade multiple systems. I am in favor of it because it encourages you to contemplate about the worst case scenario and the DD that you are willing to tolerate. And I agree that this is important when you are incapacitated.

In my view it could be attached to the existing emergency shut down, as a feature "Commence emergency shut down when current draw down exceeds [x]%", where x is specified by the subscriber.


Your suggestion might help to avoid Stockholm syndrome for subscribers at C2. Of course your stop losses won’t guarantee exit at the level you specified however you’ll have a deal only with your risk tolerance, not with beliefs of a system vendor.