Only Low Risk – Low Drawdown Investments

One of the most common error


"I selected a profitable managed account but I'm losing money", many times I hear this sentence. Why happend this?

We must be honest with ourself: How we select the account? The reality is that many people look mainly to one thing: PROFIT!  This is totally wrong !!

The profit is just one factor, it's important but is NOT THE MOST IMPORTANT THING to look at! And this is the reason why so many people lose money, I don't talk of scammers now but I just refer to the strategy.

Another important aspect you must check is the Stability and Low Volatility of a strategy.

There's a strong correlation between the VOLATILITY and a " LUCKY FACTOR ".

As we are not gamblers but investors we must  reduce to the minimum the " lucky factor ".

Example of volatile investment: 



In this example I suppose to enter after May, why? Because usually we make investment after we see the account goes well !

Who will enter after June (-16%) ?

So just after go inside  we take a -16% and is not a good beginning.

In volatilty systems we can finish the year losing EVEN when the account is profitable!

So this show you again that Stability and Low Volatility are other important factors, funds that have for instance 50% of drawdown are also volatile.

Even if the fund show you that is in profit what happend if you begin the investment in the wrong time and you pick up the 50% of drawdown?

You lose money but also confidence in the system and you're angry because statistics show you the system is profitable in the long run.

So to avoid " lucky factor  " is better choose low volatility systems.