Introduction
My name is Jack Kellogg, and I’ve spent the last several years mastering the art of trading drawdown recovery. In this case study, I’ll walk you through my personal journey – from experiencing a $400k drawdown to making $750k in a single month through disciplined risk management and psychological resilience. What most people don’t understand is that trading success isn’t about avoiding losses completely, but how quickly you can recover from them while maintaining your mental health. I’ve learned that the most critical skill in trading isn’t finding the perfect setup, but knowing exactly how to manage yourself when things go wrong.
Trader Talks QnA
What happened to your trading after our last interview regarding mental burnout?
I was burned out from focusing solely on trading and ignoring everything else. I went through habitual burnout – constantly burning out and recovering only to burn out again. When the market slowed down, I got sick of it and realized I needed to change. The main thing that helped me mentally was going outside for walks every day and taking care of myself. I started seeing a therapist and a coach, getting proper haircuts, and making sure I was drinking enough water. I also moved from a tiny apartment to a two-bedroom house with space for stretching and meditation, which dramatically improved my mental state.
What caused your recent drawdown in November-December-January?
After a huge win on DWAC where I made about $650k, I got emotionally spent. I had no energy, was very irritable, and basically ignored everything outside of trading. I was stuck in a tiny apartment which made my mental health worse – dogs barking, people stomping above me. It was winter which affected me too – I love being outside getting sunlight and vitamin D, and seasonal depression is real for me. When I lost $170k on the CAR short, trading stopped being fun. My wins were small and losses were huge. Nothing was enjoyable – it was cold out, I couldn’t do things outside, my girlfriend was busy with family, and my trading friend was also in drawdown.
How much did you lose during this period?
In November I lost about $250k, December I lost around $10k because I didn’t really trade much, and in January I had one bad red day where I lost $100k. That’s a total $400k drawdown through those three months, which was about 5% of my total profits at that point. Looking back, that’s actually not that bad for a three-month drawdown – about 1.7% per month of what I’d made.
How did you recover from this drawdown?
I started from ground zero – trading with just $1k-$3k risk per trade. I also began meditating on February 5th using the Headspace app. I went on a strict diet, logged off social media, and focused on rebuilding my mental state. In February, I made exactly $115k, which brought me back to even after my January losses. Then in March, with great opportunities in the oil sector and meme stocks, I was able to make $750k. The key was not trying to make it all back with one big trade – I accepted the damage was done and started small.
What’s your risk management approach when you’re winning versus in drawdown?
I use a basketball momentum analogy. When you’re hot in basketball, you keep shooting threes because you have that confidence and energy. When you’re cold, you take layups to build yourself back up. When I’m winning, I gradually scale up my risk – from $1k to $1.5k to $2k and so on. When trading oil stocks in March, my risk went from small amounts to $20k on good setups, which is how I made big gains. But when I’m losing, I quickly scale back – if I was up $110k early in April and then started taking losses, I immediately reduced from $5k-$20k risk down to $3k-$7k, and if I get to break-even, I go back to $1k-$2k risk immediately. My equity curve doesn’t have deep drawdowns because of this approach.
What advice do you have for traders struggling with drawdowns?
Don’t try to make it all back with one big trade – that’s dangerous when you’re not mentally there. Reset to small risk and build yourself up slowly. Take care of your environment – I moved from a noisy apartment to a house with space, which helped my mental health tremendously. Work on your psychology outside of trading – meditation, diet, exercise. Focus on adding to winners rather than losers. I’m not a fan of traders with high win rates but huge losses that wipe out weeks of gains. I’d rather make nothing for a few weeks than risk giving back all my gains. Remember that trading is about longevity – if you can keep your drawdowns small, you’ll always have capital to trade with when the next opportunity comes.
Jack Kellogg Trade Statistics
Over the past year, I’ve refined my approach to trading to maximize recovery during drawdown periods while capitalizing on strong market opportunities. Here are the key statistics from my most recent trading journey that demonstrate how proper trading drawdown recovery techniques can turn losses into substantial gains.
- Recovered $400k drawdown in November-January 2022 with disciplined risk management
- Generated $115k in February 2022 by trading small positions ($1k-$3k risk)
- Achieved $750k profit in March 2022 by strategically scaling position sizes
- Maintained maximum drawdown at just 5% of total profits during difficult period
| Month | Profit/Loss | Risk Per Trade | Key Market Opportunities |
|---|---|---|---|
| November 2021 | -$250,000 | $10k-$20k | Post-DWAC volatility |
| December 2021 | -$10,000 | Minimal trading | End of year slowdown |
| January 2022 | -$100,000 | $5k-$15k | Post-holiday slump |
| February 2022 | +$115,000 | $1k-$3k | Recovery phase |
| March 2022 | +$750,000 | $5k-$20k | Oil stocks, meme stocks |
Key Trading Insights from Jack Kellogg
Through years of experience, I’ve discovered that sustainable trading success comes not from perfect setups, but from masterful trading drawdown recovery management. Here are the most valuable lessons I’ve learned that can transform your trading results.
- Risk should scale with momentum, not against it – increase position size when winning consistently, decrease immediately when losing
- Your trading environment directly impacts performance – upgrade your physical space for better mental clarity
- A 5% drawdown is manageable; a 20%+ drawdown requires months to recover – keep losses small
- Mental health is your most valuable trading asset – meditation, exercise, and proper diet directly impact P&L
Jack Kellogg Trading Strategy
My entire trading approach centers around momentum recognition and psychological management. Rather than chasing perfection in entry points, I focus on how I manage my account through winning and losing periods. Here’s how I structure my trading drawdown recovery framework that keeps my equity curve consistently upward.
Momentum-Based Position Sizing System
I use what I call the ‘basketball momentum’ approach. When I’m making money consistently, I gradually increase my risk – from $1k to $1.5k to $2k and so on. During my best month (March 2022), I had setups where I made $50k on a $5k risk (10:1 reward-risk). But the moment I start taking losses, I immediately scale back – if I was up $110k and then lost some, I’d go from $10k-$20k risk down to $3k-$7k. At break-even, I reset to $1k-$2k risk. This prevents small drawdowns from becoming catastrophic. I only trade clear directional moves – I can’t handle choppy markets that go up and down all day. It’s either one direction or nothing.
Drawdown Recovery Protocol
When I enter a drawdown, my first priority isn’t recouping losses but preserving capital and mental clarity. I immediately reduce position size to $1k-$3k regardless of how frustrated I feel. I also implement mandatory non-trading days for mental reset. I’ve found that trying to ‘trade out’ of a drawdown with larger positions is the fastest way to destroy an account. Instead, I accept that the damage is done and focus on rebuilding slowly. During my recent $400k drawdown, I didn’t make it back with one trade but through consistent small wins that rebuilt my confidence and account balance.
Jack Kellogg Tools
Mental clarity and physical environment are just as important as technical tools in maintaining proper trading drawdown recovery discipline. Here are the resources that help me stay grounded and focused during volatile market periods.
- Headspace app for daily meditation (critical for mental reset)
- Cobra Trading as my primary broker with fast execution and excellent short locate availability
- Profit.ly (jackaroo) for verified trade journaling
- Breakouts and Breakdowns chat room with educational webinars
Common Trading Mistakes to Avoid
Based on my personal experiences with significant drawdowns, here are critical errors that prevent proper trading drawdown recovery that every trader should avoid. These mistakes cost me hundreds of thousands before I developed my current approach.
- Trying to recover large losses with oversized positions rather than rebuilding gradually
- Neglecting physical and mental health while focusing solely on markets
- Staying in a negative environment (tiny apartment, noisy surroundings) that affects trading psychology
- Chasing choppy markets instead of waiting for clear directional moves
Conclusion
Mastering trading drawdown recovery has been the single most transformative skill in my trading career. By focusing on small, consistent wins after losses rather than miraculous recoveries, I’ve maintained an equity curve that steadily rises without catastrophic drawdowns. Remember that trading is a marathon, not a sprint – protecting your capital during difficult periods ensures you’ll be around for the next big opportunity. For daily insights and verified trade examples, follow me on Profit.ly (jackaroo) and Instagram (@jackkellogg). I’d love to hear how you implement these drawdown recovery techniques in your own trading journey – drop a comment below sharing your biggest challenge with managing trading losses.