nitely was a price to pay for the higher return as compared to the return from
risking only 2 percent per trade in Figure 26.5. The first thing we notice is that
the largest drawdown is almost twice as deep in Figure 26.12 as in Figure 26.5.
The longest flat time also is six days longer. These changes can also be seen in
Figures 26.13 and 26.14. In Figure 26.14, the largest drawdown goes on for
another several days as compared to the largest drawdown in Figure 26.9. This
shows up on Figure 26.13 in the form of a more flattened out equity curve than
that in Figure 26.8.
The larger swings in the equity curve also show up as a lower risk–reward
ratio in Figure 26.12. That the larger price swings are mostly connected to the los-
ing trades is evident from the lower profit factor, which, despite the higher profit,CHAPTER 26 Dynamic Ratio Money Management 321
FIGURE 26.11
Changing f from 2 to 4 percent.