The one rule that would have saved my client from a 50% drawdown.

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Words I Like: “The mistake wasn’t in pulling the tooth, it was in watching it decay and calling it patience.” – Alex Hormozi

5-𝙈𝙞𝙣𝙪𝙩𝙚 𝙁𝙪𝙩𝙪𝙧𝙚𝙨: 𝙏𝙝𝙚 𝙤𝙣𝙚 𝙧𝙪𝙡𝙚 𝙩𝙝𝙖𝙩 𝙬𝙤𝙪𝙡𝙙 𝙝𝙖𝙫𝙚 𝙨𝙖𝙫𝙚𝙙 𝙢𝙮 𝙘𝙡𝙞𝙚𝙣𝙩 𝙛𝙧𝙤𝙢 𝙖 50% 𝙙𝙧𝙖𝙬𝙙𝙤𝙬𝙣.

Most traders don’t blow up from taking bad trades.

They don’t even blow up from refusing to cut losses.

I’ve seen it over and over:

Trading without a stop loss
Suddenly down −10% to −20%, hold and hope for breakeven
Unrealized loss spirals out of control
Forced to liquidate emotionally, usually at −40% to −50%

The mistake wasn’t in holding the trade.

The mistake was never defining the risk beforehand.

Every strategy has a point where the odds are no longer in your favor.

That’s where your stop loss should go.

The problem is most traders don’t know how to properly back test their strategies.

They lost the moment they started trading by hand without a system.

Imagine this.

A kid walks in with a brutal toothache. Hasn’t been brushing. Sugar all day. No routine.
The dentist says:“If we don’t pull this one tooth, the rot spreads… and you’ll lose more teeth.”
They start. The kid feels pain and blames the dentist, vowing, “I’m never going to the dentist again.”

He learned the wrong lesson. He associates the pain with visiting the dentist instead of the lack of a system for prevention.

In trading, the painful emotions you feel around drawdowns are just symptoms of a bigger issue.

They stem from not having a proven trading system with predefined risk.

The pain and uncertainty doesn't come from taking a single bad trade. Its the cost for trading without a system.

Once you get stuck holding a losing trade, you’re forced to choose between:

A) Ignore the pain

Hold. Hope. Pray it “comes back to breakeven.”
Watch the position constantly.
Let trading control your mood and emotional state.

B) Pull the tooth

Cut the loss.
Put out the fire now to protect the rest of your capital.
Set up systems to prevent it from happening again.

Most people wait until the pain is unbearable. They feel helpless as they watch their accounts drop far more than they ever planned to risk on a single idea. That’s how 50% drawdowns happen.

The Actual Fix: Install a system

Just like you don’t prevent cavities with “more willpower,”
You don’t fix emotional trading with “more discipline.”

You fix it with systems that make following the rules automatic:

I don’t “feel out” how much to risk. I back test it.
Entry, exit, stops, and profit targets are all predefined and 100% precise via code.
The system enforces the max loss; I take the human out of execution entirely.

The result isn’t zero pain, its controlled risk spread out over manageable doses...choose the an ounce of prevention over a pound of cure.

The rule: