Last week I was able to make 2 very good trades which left me with 1 only trade to go in order to get the funded account since I am using compound risk as growth model, see Part 1, to achieve our 10% profit target.
Unfortunately, I got trigger happy and took a trade on Sunday night not long after market just opened. Trade went in the red, had to close according to plan. However, I didn’t pay attention to the trailing drawdown rule vs absolute drawdown rule. The trailing drawdown means, you cannot go lower than x% from the highest balance achieved while absolute drawdown is the maximum loss you can occur on your account base on the initial account balance.
Let’s take for example a 25,000$ with 5% trailing and absolute drawdown. If you reach 26,000$ with trailing you get stopped out at 24,700$, now with absolute drawdown you get stopped out at 23,750$ no matter the highest balance achieved. Because I use bigger risk for every win, that 3rd trade which turned into a loss really hurt the account growth as I now only had less than 500$ to recover.
To be honest, I think it was more than enough to win the account on first try but after looking back at what happened, I believe I was just too in a hurry to win the challenge in 3 consecutive winning trades. I ended up over-exposing myself trying to make it all back at once and eventually called it quits after a series of very bad trading.
I have now purchased another trial challenge account and will hopefully be able to apply more self control.