I never meant to imply that my system was ‘good’ or ‘bad’, as that is purely subjective and differs with each investor’s risk tolerance and ambition. To believe any system is good purely based on drawdown statistics is truly preposterous as you so eloquently put.
I am personally very unhappy with my 27% draw down, but one could point out that a subscriber from day 1 (starting capital of $25,000) would now have an account value of $53,000. This is against a low water mark of $18,000. This all occured within a very short term time frame (92 days), and I realize that this is inherently more risk than many conservative traders can tolerate. I will explain my rationale and reasoning for the drawdown, as well as my gameplan moving forward.
For starters, Draken ETF is not meant to be a vehicle for those who seek stable and predictable scalping type returns. Conservative investors would be better served with a mutual fund, basic index or bond fund, or even an annuity. My goal is to offer returns that will conquer equity indices and rival top hedge fund performance over long time frames. There is no free lunch in this cut throat business, and one cannot expect outsized returns without accepting a reasonable amount of risk.
In my opinion, any equity system that will not tolerate a drawdown of invested capital of around 15-25% cannot expect to defeat the equity index ETF’s over a long time period by a substantial margin. To risk only a 5-10% maximum drawdown and hope to consistently outperform the broader markets is to want to have your cake and eat it too. I don’t offer the holy grail, or a get rich quick scheme, and I won’t be a charlatan and claim otherwise.
My current max drawdown is right on the edge of the acceptable parameters for my system, and I am aware that this statistic is enough to scare away many subscribers from such a newly created C2 trading vehicle. On the other hand, this establishes a realistic expectation of what the stated goal of my system is: to soundly defeat 99% of all equity trading systems in the universe, while providing superior risk characteristics LONG TERM.
The reason you see this drawdown so early within Draken ETF’s existence is mainly based on the fact that I chose to enter one of my few ‘macro’ longer term trades based on rare circumstances. My proprierary trading models and indicators gave the strongest signal I had seen in many years, and I acted upon this information after long hours of study and thoughtful research. I decided to act upon the signals and initiated a large short position on a biotech index. My timing was not perfect, and my entry was not exact, but the risk to reward prospects of the trade were too good to pass up.
There are limited instances where I have seen opportunity like this over the last decade of actively trading the equity markets, and I could not pass up this trade in good conscience.
As I have stated before, I reserve these macro-based, longer term trades for only my most robust trading signals, and typically prefer to snipe the markets on a shorter duration to build equity and limit down side risk.
Make Money vs Balance Risk. Art vs Science. Market Psychology vs Efficient Markets. Mechanical vs Discretionary. Emotion vs Logic.
The best traders thrive in a realm of complexity against a backdrop of constant evolution and changing stimulus.
I fully recommend anyone interested in my system to perform thorough diligence and start with small allocations. See if Draken is right for you, paper trade, run statistics, or pray to the seven gods of Westeros.
No one cares about your money like you do, so act accordingly.