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Another Drawdown - What Next?

Our portfolio was doing amazingly throughout 2021 well but in November we took a 9% drawdown and then an additional 4% drawdown in December. This meant that we ended up pretty much net zero for the year which was disappointing.

So what happened? Well, markets happened... markets do what they do.. move up and down and not necessary behave how we expect. Our trading algos were showing tremendous results in the previous months.

From the diagram above which I lifted from Darwinex, you can see that from March 2021 to October 2021 we had allocation of funding capital from Darwinex 7 out of the 8 months and then in November and December where we suffered drawdown, nothing.

I checked through quite a few other Darwins (trading strategies) on the site and could see that there were also quite a few which suffered during November and December.. this tells me that it wasn't just my algos but a change in the market behaviour.

December is also not a good month to trade historically due to low volumes due to the Xmas and New Year period... however, I had kept my algos running as they were doing well the previous months and I thought that they would continue to perform.

From the diagram above, however, there's some good may have spotted that it seems that we're currently tracking for an allocation in January.. there's quite a big drawdown dip that we need to climb out of as you can see below:

And we are making a comeback.. it would be great to have a straight line recovery up to new highs but many years in this business tells me it won't be like this but you can never know!

I have rebalanced the portfolio in January targetting the algos which historically have shown to be the most stable over a longer period of time and this has help the recovery.

Only time will tell but I believe in the long term viability of the strategy...

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