Quote Originally Posted by Billy View Post
2) It is foolish to try to use ATR for targeting fixed drawdown percentages. If you can't stand more than X% drawdowns, just use a fixed X% percentage stop. But your performance will decrease drastically unless you sell often on targets. But even such a strategy with optimal targets will underperform significantly risk-adjusted returns from a trailing ATR% stop.

Billy
The term "X% drawdown with a fixed stop" is really a MAE (max adverse excursion) for a single trade, which is not the same as account drawdown on open equity spanning consecutive trades. Without extensive backtesting, I believe it's impossible to arrive at drawdown estimates for any given stop strategy.

Trader D