I’ve been following this trader for 3 months and I’m up 18%. But lately, their drawdowns have been quite significant.
I’m torn between pulling out now or staying the course. What do you typically do in these situations?
Check their trading history way beyond those three months. Look at their worst periods and how they bounced back. There’s a big difference between someone who’s recovered from similar drawdowns before versus someone hitting new lows. My rule: cut position size when drawdowns hit 10% from peak. Only bail completely if their risk per trade changes or they start revenge trading. Most solid traders go through rough patches that look terrifying in the moment but even out over time.
Check their actual numbers from those recent losses against their usual pattern. If they normally risk 2% per trade but jumped to 5% on single positions, that’s when you bail. But if their position sizing didn’t change and markets just turned against them, I’d cut my allocation in half and wait a month to see how they adjust.
Been there twice. First time I pulled out at +20% when the trader got reckless. Smart move - he crashed two weeks later.
Second time I rode out a rough patch and lost most of my gains. Learned to set exit rules beforehand.
I bail if drawdowns hit 15% from peak or if they completely change strategy. 18% profit’s decent - I’d take half and watch how they perform over the next few weeks.
Drawdowns are normal, but deeper or more frequent ones? Red flag.
If their risk management is the same and position sizes are steady, I stick with them for now.
Three months is too short to judge anyone.
Depends what’s causing the drawdowns. I track every trader I copy - monthly returns, biggest losing streaks, all in a spreadsheet.
Last year one guy went from 25% gains to a brutal 12% drawdown in two weeks. Turns out he ditched EUR/USD for exotic pairs without telling anyone. Dropped him instantly.
Another trader hit similar drawdowns but stuck to his usual pairs and lot sizes. Rode it out - bounced back in a month.
You’ve got 18% gains as cushion. Cut your allocation by 60% and watch for two weeks. If drawdowns keep getting worse or drag on longer than usual, bail completely.
Better to leave money on the table than watch it all vanish.