Paul,

If you can accept 40% drawdowns then your a much more risk accepting punter then me. I prefer a maximum of 5%.

My issue with a higher drawdown is for my own mental health.

Its because of the numbers below:
A drawdown of 40% on $100 is only $40. <- Most people can handle this easily.
A drawdown of 40% on $1000 is only $400. <- Most people can handle this for short periods providing the bounce back is quick.
A drawdown of 40% on $10,000 is $4000. <- Most people can not handle this even with a quick bounce back.
A drawdown of 40% on $100,000 is $40,000. <- 99.9% of people can not handle this without affecting their health and mental state.
A drawdown of 40% on $1,000,000 is $400,000. <- 100% of people can not handle this at any stage.

At 5% the numbers are a bit different :

A drawdown of 5% on $100 is only $5. <- Everyone can handle this easily.
A drawdown of 5% on $1000 is only $50. <- Most people can handle this easily.
A drawdown of 5% on $10,000 is only $500. <- Some people can handle this easily, others will not.
A drawdown of 5% on $100,000 is only $5K. <- Less than 20% of people will probably be able to handle this loss.
A drawdown of 5% on $1,000,000 is only $50K. <- Less than 10% of people will probably be able to handle this loss.

Its all about the size of the loss. Losing 40% of a small number is nothing when people compare it to their wages and other spending they do. When they lose 50K its much different.

As I progress building my bet sizes I can now take losses easily in the thousands but its a learned state of mind and it takes time. If I had to also contend with 40% of my bank gone I would be a mental wreck.

For smaller punters (who have a bank less than $1K) then a higher drawdown is probably acceptable, but do you think a punter should lower their drawdown % as their bank grows ?