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london_trader


Total Posts: 1
Joined: Sep 2022
 
Posted: 2022-09-22 17:16
I have developed a fully automated crypto trading strategy for which has been showing promising results and I am now looking to raise money to expand and hopefully trade to its full capacity in the future. My analysis on the backtest results shows there is a small possibility of of 40-50% drawdown (probably once a year or so) if use the biggest position size my backtest allows but if I reduce my position sizes to half, then these DDs will drop to half as well. Now, the question I have is, lets say I have 100k, is there a best practice to scale up (and down) to the maximum amount of money we are going to invest considering the reality that all strategies eventually lose their alpha. Lets say we do hit a big drawdown, at what point we decide to pull the plug. I know we can aggressively reduce the position sizes as we lose but still I think there will be a big drawdown and we will have to decide whether to pull the plug or not. So in nutshell, how does a trader scale in and out of a strategy during the 'whole lifecycle' of a strategy which has worked fine for a while and eventually lost it edge ?

Thanks

Shivaniroy


Total Posts: 4
Joined: Sep 2022
 
Posted: 2022-09-29 05:41
Thank you for sharing such wonderful thoughts. Please keep writing. I want to read more from you.
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