Skip to content
GetProfitable
Search
Dictionary

Undertrading

Taking too few of your qualifying setups, or sizing far below plan, so a working edge is never expressed.

Undertrading is the quiet failure. It produces no blow-ups and no stories, just an equity curve that never goes anywhere and a trader who concludes the method does not work.

The causes are usually fear rather than patience: a recent loss, capital that matters too much, or an unresolved drawdown. It is often the phase that follows a large loss, and it can persist for months. See hesitation and scared-money.

Measure it before fixing it. Log every setup that qualified, whether or not you took it, and compare taken to available. If the ratio is low, the problem is execution rather than strategy, and the answer is smaller size with full participation rather than bigger size occasionally.

Related: hesitation, scared-money, impostor-syndrome, process-goals

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

An equity curve and its drawdownAn account balance rising over a year, falling from a peak to a trough, then climbing back to the old peak.ACCOUNT EQUITY$20k$12k$8k024681012TIME (MONTHS)PEAK $16,000TROUGH $12,000DRAWDOWN−25%RECOVERY
Equity curve and drawdown. An account balance plotted month by month. The fall from the $16,000 peak to the $12,000 trough is a 25% drawdown, and the shaded area lasts until the balance climbs back to the old peak.

Educational only, not advice. Spotted an error? Post in Site Feedback.