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InvestiQuant

What Are Drawdowns?

Drawdowns are reductions in your account balance due to trading losses exceeding trading gains. They can occur quickly and suddenly over multiple days in a row, or gradually over a period of weeks and months.

Why Do They Happen? 

The equity markets are driven by fear and greed and most of the time short-term price action can be traded successfully by iQ’s sophisticated algorithms. However, sometimes market pressures will exceed their historical tendencies and InvestiQuant’s auto-adaptive autotrading strategies may struggle. These losing streaks are unpredictable and the causes are impossible to pinpoint as statistical randomness often plays a role. 

Should I Pause My Account?

When the frequency or magnitude of losses is greater than expected, it is natural to wonder if the program is broken and if you should stop trading. Sometimes this is the best decision for one’s financial situation, but more often it is a costly financial mistake based on fear and a common cognitive flaw called “recency bias.” 

Helpful Tips:

  1. Expect drawdowns. They are completely normal and part of the ebb and flow of ALL trading and investment strategies.
  2. Ignore the noise. Like flipping a coin, randomness happens. Don’t obsess over daily and monthly statements.  Relax and let iQ’s long-term edges play out.
  3. It’s not the strategy.  When iQ autotrading returns are weak, it’s because the markets are behaving outside of their historical norms (i.e. statistically-based tendencies).                
  4. They’re typically short-lived. By the time most investors become concerned, the worst of the drawdown is often behind them and brighter days are ahead.                
  5. New highs are (likely) nearer than you think. The largest account run-ups (gains) occur after drawdowns. Most iQ programs can recover to new highs in 1-3 months.            
  6. Turn them into opportunities. Every new all-time high was preceded by a drawdown, so use them as opportunities to add to your autotrading investment.
  7. Patience pays. iQ strategies don’t break — they auto-adapt to changes in market conditions and behavior.  Typically, the most successful iQ clients are the most patient.        
  8. You are in control. You can switch programs or pause the trading of your account for any reason at any time.
  9. It's okay to stop trading. If your financial or emotional "uncle" point is hit, it may be better to stop than risk more, as there are no guarantees. (Tip: ensure it's well beyond the program’s max historical drawdown, otherwise you likely are reacting to recency bias.)
  10. You are not alone. Email or call us. We rely on the same strategies and have been trading them with our own capital for more than a decade. We are here to help! 
How IQ Clients Deal With Drawdowns
“When investing, not wanting to take losses is like only wanting to breathe in without breathing out.” — Van Tharp

I was a new investor with the program and after a slight bit of upside we went into a drawdown.  To keep myself from panicking, I would go back to the historical performance, by month, again and again.  I’d look at months or periods with similar drawdowns and saw how those losses were erased and then turned into gains. 

Those charts were incredibly reassuring.   I also read all the emails that came through about performance and commentary. 

I found it trustworthy that even during a drawdown the company would continue to communicate and not hide current performance.   Many services go over the top trumpeting wins and then go silent or downplay losses.  I don’t get that here. – Bill P, IL,. USA

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It can be difficult when the track record is 30%+ but say, as in my case, a person's account value is a little down after fees. We have to remind ourselves to think long term. Think five years, ten years if it’s an investment. Otherwise we are speculators. I have been invested for less than a year but am not concerned that my account isn’t way up. 

The key to investment success is PATIENCE and asset allocation when we are retired. I don’t look at statements but once or twice a month. 

If someone wants instant success in Investiquant, or will second guess the system or fret over the volatility of the daily return, this isn’t for them. It’s no different than any other investment. No one should invest with Investiquant unless they have done their due diligence and have confidence in the program that it works over time. – Charles V, TX USA

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I learned the hard way not to pull all my money out. It all boils down to trust, but it takes a bit of knowledge also.

What I mean, is that I had trust in the system, but after 8 months or so of PnL being roughly flat I pulled my money out.  I looked at the annual stats and trusted as far as that, but what I didn't know was Meta (the program I'm in) can make most of its profits in 1 or 2 months. Had I realized that I probably would have not pulled out the first (and only) time.

Later, when I was looking to rejoin the second time, I happened to read one of the iQ monthly newsletters and saw that stat I mentioned above, looked at the returns after I pulled my money out and facepalmed big, because I lost out big

I knew it wasn't a get rich quick thing, but it felt like it was a do nothing thing for too long without the knowledge of that one stat. Now I feel like I'll wait out anything and everything.

I hope that helps someone not to miss out like I did. – Daniel D., TX USA

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Drawdowns are never easy.  They are part of the process.  Focus on the bigger picture and remain calm.  Over the long haul the upside swings should outweigh the downsides.  Don't play this game with money you need in the short term. – Chris K., MO USA

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“Drawdowns are painful, but part of the investment process. In my opinion, you should only discontinue an investment if the thesis is broken or your goals have changed. An Investiquant program needs a reasonable time frame to evaluate performance (at least a year).  You also need reasonable performance expectations. 

Investiquant's investment thesis is not broken and will continue to provide, over time, market beating performance. – Jim H., FL USA

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Believe in the process (read Investiquant)! – Garret V., Belgium
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Managing drawdowns is never easy, I have struggled for sure. What helps me is that at the beginning of the year I put a calculated max drawdown $ based on the system's historical performance. I prepare myself that at some point this amount of drawdown will happen, it's normal and no need to panic. I will only worry if the actual drawdown exceeds this amount by a large amount. 

People may accept a 15% drawdown when they evaluate a system, but they still are not ready when the account suffered a loss in a live account even though that amount is still 15% which they assumed to be acceptable.

I think preparing themselves with the actual dollar amount of loss and making sure they are OK with it is important. – H. Sun., CA USA

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Main thing is to invest the kind of capital that  you are willing to lose.  Trust their data and consider it as a long play. –  Erik S.,  Estonia

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Like everyone else, I don’t like draw downs.  How I manage it emotionally is by remembering that this is only a small percentage of my total portfolio and any draw down I have experienced was very small compared to the swings of my overall portfolio any given day. 

Stay long-term focused. – Kevin R., IL USA
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Before I opened the account, I mentally wrote off 40% of the money I put in as being gone for possibly the next year or two. 

That size loss was acceptable because I allocated only a smaller portion of my net savings to the account. That kind of loss was small enough to keep sleeping well.

During the drawdown months, I reminded myself of the volatile nature of your strategies and that the long run results are highly profitable. In one sense, I don't really care what the account does this month or even this quarter. I really care about what the account will do by 2030 — when I fully expect a much bigger number in it than today based on the track record.

Once the account is into profitable territory, drawdowns are tolerable as they are easily envisioned as declines in "market's money". That's not my money, it's profits from the market. My "attachment" or sense of value of the market's money is much less than the attachment or value my money has. – Richard H., NC USA
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My account's initial drawdown was very difficult to watch because I just wasn't seeing the "advertised" returns, and although she wasn't saying it, I think my wife was starting to doubt the wisdom of investing with IQ.  Let's be honest — it is not cheap to begin with and to be down 16% a year later was not a pleasant feeling. 

Here are some things that helped me get through this major drawdown:

      1. I asked myself, do I trust the people that run IQ?
      2. I asked myself, what are my other options - especially if the market turns south?
      3. I asked myself, do the people that run IQ have their money invested in this as well?  Are they experiencing my pain?
      4. I kept telling myself every investment has drawdowns, and the last thing I want to do is sell at the low.
      5. I kept reading all the information sent out by IQ and attending all the Webinars so I could hear from the IQ leaders and take encouragement by what was said.
      6. Most importantly, I finally scheduled a call with Scott in April, and his optimism encouraged me to stay the course - AND I'M GLAD I DID! – Don G., PA USA

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What compounded the pain during drawdowns:

      1. Checking daily statements.
      2. Extrapolating fear in my head the systems have broken and will never work again and I'll lose it all.


What helped:


  1. Setup smart email inbox to segregate broker emails so they aren't visible in primary inbox.
  2. Emails to the IQ team and very detailed responses that allowed me to stop checking weekly statements.
  3. Mindset journal to highlight why emotions are so untrustworthy and entice you to make bad decisions at the worst possible time.
  4. Reading the monthly IQ review emails.  They provide fantastic context and insights. 

Let me know if you ever need any sales people....I can't be a bigger proponent of these programs!!”  – Ryan M., UT USA


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Trust the process, positive expectancy combined with sound risk management proves out over time, not day to day. – Ryan P., WA USA

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For More Information


The two most helpful tools used by iQ clients for managing drawdowns:

1) iQ monthly update and educational emails (featuring the blog and Matt’s Minutes videos)

2) The interactive iQ Portfolio Builder:  portfolio-builder.investiquant.com                                                                                                                                                                                       

If you are no longer receiving emails from InvestiQuant with this helpful content, or would like to speak to a iQ representative about your account, reach out to [email protected].