adaseb wrote:The problem with all these trading robots is the drawdown.
Many that sell their product never tell you that. They never use 20-30 pip stops.
Look at the #1 robot that made $160K.
Max drawdown was $60K which at the time was about 50% of the total portfolio value.
So in the long run seems like a good way but eventually sooner or later your entire portfolio will be eventually wiped out.
These robots are nothing but marketing schemes.
The problem is lack of ones knowledge regarding the method used and the characteristics thereof. If they don't go beyond full Kelly, profits are maximalized whilst the chance of ruin is minimalized. Big drawdowns can and probably will happen though. It is the method that, once proven, should give one the insight and trust to live through these drawdowns without quitting when the going gets tough.
I wouldn't write off nor use any of these robots without knowing exactly what they do and how they work plus the statistical proof that they are based on solid principles. Wether or not one can live with big drawdowns is a psychological matter, especially since the biggest drawdown is always ahead of one. Not a pleasant idea when you're just experiencing a 50% drawdown..
There is another thing to keep in mind. Say you start with 10k, and you end up with 170k, your max drawdown was 60k. Have you lost your 10k ? No. Have you made money ? Yes. Would I be happy ? Yes. It's all a matter of psychology. I'm currently running a mechanical system that has been proven to be profitable over decades. I will be happy, and I will face big drawdowns.