Recently there was a drawdown on most Waka Waka users' accounts due to a strong trending movement on the AUDCAD pair. This drawdown is already covered on the majority of accounts. However, it caused losses in cases where people used too high risks.
Here I will list everything important to know about this event:
📊 First of all - poll results. I am grateful to the users that made this poll (you can see the results above this post). Some people closed the trade at a loss manually, but as it's clear from this poll, for the overwhelming majority of those that kept the EA running, everything was closed normally by a TP.
📈Secondly - MyFxBook stats: We can see using MyFxBook sentiment how retail traders handle the current situation. While most traders that have positions on AUDCAD still have short positions on AUDCAD (98-99%), only a small minority of users (including most Waka Waka users) have already got out. The overwhelming majority (about 90-95% of traders) still have short positions on the AUDCAD. This means that Waka Waka handled this difficult situation better than 90-95% of traders out there. Not only it exited the position where the overwhelming majority of traders still had opened positions, but it also made a profit doing that.
📉Thirdly - the actual drawdown was achieved. Above this post, you can see drawdowns compiled by one of the Waka Waka users. These are worse than on my accounts (I had 11% DD with 0.5% deposit load, not 16%). But these show that even people that had the EA running with high risks (1.5% DL) and those with results worse than on my accounts had a 50% drawdown, which can be tolerated when you are ready for high-risk trading. And if you are not ready for high risks, you should not choose such risk settings in the first place.
➡️ Now, such situations always happen from time to time with any grid system. The most important thing here is to plan what to do in such cases in advance. There are numerous money management and risk management options in the Waka Waka EA to help with that. It takes an hour at the most (if you know little about trading) to sit down and consider all possible scenarios and your actions in each of those. It mostly comes down to four things to consider:
1️⃣ Your risk level. That's very easy - take a look at the table above and multiply the maximum drawdowns there by 2. Since any trading system will have a drawdown exceeding the maximum historical one (that's just a fact, there is no way around that, no matter how you trade and what system you use), you should expect that the future drawdown will be larger than the one seen on historical data. If you can handle this x2 drawdown without any trouble, it means that the risk level was chosen correctly.
2️⃣ Your drawdown level. Just set the 'Maximum Drawdown' parameter to the level on which you want all losses to be cut. It usually makes sense to set it between x1 and x2 from the worst historical drawdown with the chosen risk level.
3️⃣ Whether you want to use additional risk limitation parameters. The most important here is 'Break Even after this Level'. If you think that after level n of the grid, it's better to close all trades with a zero result, you can just set this parameter to the specified grid level, and you'll exit the grid at the earliest possible opportunity with the zero results (not profit, not loss)
4️⃣ Whether you want to use additional filtering. For example, the recent drawdown was avoided with people that use the 'Stock Market Crash Filter Enabled' parameter. You can see a list of all the new parameters, including this one, added in the last update here.
✅ For most people, it takes just 10-15 minutes to sit down and have a set of these few parameters to fully secure the account according to your personal risk tolerance level. If you choose your risk level wisely, it's almost impossible to get losses higher than anticipated. I highly recommend sitting down and spending a little bit of time planning your actions in all possible scenarios.
Best wishes,
Valeriia.