Volatility - good or bad

It is not easy to develop a trading model that is not volatile and also gives high returns. Volatility is what creates the high returns investors want from the market in the first place. Investors become so frightened by viewing peaks and drawdowns. In systematic trading with a positive edge big swings in equity are very much anticipated and do not signal a loss of control.

Trend following models have 2 requirements: The need to preserve capital during losing periods so you can stay in the game until a winning period and the need to preserve psychological fortitude to keep playing.