Drawdown control > win rate
Most traders obsess over win rate. Professionals obsess over drawdown control.
The Win Rate Trap
A 70% win rate sounds impressive. But if your average loss is 3x your average win, you're bleeding capital. The math doesn't care about your ego.
Why Drawdown Matters
Prop firms care about one thing: max drawdown. Exceed it, and you're out. No second chances. A 90% win rate means nothing if a single bad week blows your account.
Our Framework
- Daily loss limit: 3% (firm limit is 5%)
- Position sizing scales down as equity drops
- Hard stop at 8% total drawdown
- No trading during high-impact news events
Example
Strategy A: 80% win rate, -15% max drawdown → FAILED
Strategy B: 55% win rate, -6% max drawdown → PASSED
Practical Implementation
We cap position size based on recent volatility. When ATR spikes, we reduce exposure. When equity drops 5%, we cut position sizes by 50%. These rules saved us during the August 2024 volatility spike.
Conclusion
Survive first. Optimize later. Drawdown control is the foundation of long-term trading success.