What is a 'Drawdown'A drawdown is the peak-to-trough decline during a specific recorded period of an investment, fund or commodity security. A drawdown is usually quoted as the percentage between the peak and the subsequent trough. Those tracking the entity measure from the time a retrenchment begins to when it reaches a new high. (ref)
Because it’s part of the whole game. The game of probabilities. Every now and then you will experience a batch (the T20 Principle) where you get 10 rents or more. Without a solid plan, without knowing about it in advance, it could happen and what most people would do is to abandon the plan. If your plan does not cater for this, your plan will be considered an incomplete or ineffective plan. So we must plan but not just plan, we must plan accurately, efficiently and effectively.
Factor 1: Draw-down periods
Factor 2: Lack of Discipline
T20 Principle keeps you grounded. It helps you with staying disciplined. However, what it can't stop is the probability of those major drawdown periods. But it does teach you about it. T20 principle deals with both the discipline of trading and probabilistic mindset. It’s a one shot medicine that cures all the trading diseases there are.