Drawdown Discipline
How to handle losing streaks, profit giveback and system pauses in Turtle-style trading.
Drawdowns are not exceptions in trend following. They are part of the system’s cost structure.
Losing streaks
A series of losses does not automatically prove the system is broken. Breakout systems can fail repeatedly before a major trend appears. The review should compare the losing streak with historical expectations and current market conditions.
Profit giveback
Giving back open profit is emotionally difficult, but trend exits often require it. The question is whether the exit rule was followed, not whether hindsight can find a better top.
System pauses
A system pause should be defined in advance. Valid reasons may include data failure, exchange outage, inability to execute, extreme operational risk or predefined drawdown controls. Pausing because of frustration is not a process.