Drawdown Calculation Votes Results
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Drawdown Calculation Discussion
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mlollar

Member Since Jan 24, 2010  44 posts Victory Markets, LLC (mlollar) Jul 15 2010 at 14:09
Hi,

I'm not sure that your drawdown calculation is correct. My biggest drawdown happened recently and was about $700 on a $30k account and my drawdown calculation jumped to 19.2%. It was actually about 1.92% instead. So if you could please double check my math and let me know I'd appreciate it.
Check http://www.myfxbook.com/members/mlollar/splitdecision-live/14794 and you will see on about 7/8 the dip.
Mike

The World's Currency Market is Our Oyster.
cateful

Member Since Dec 19, 2009  87 posts Fill or Kill (cateful) Jul 15 2010 at 16:47
Happens to my account too. It seems to me that the way myfxbook calculates drawdown is by measuring the peak-to-trough distance. In this case, the distance is your percent return difference. Not the best way to measure a drawdown I would say.

mlollar

Member Since Jan 24, 2010  44 posts Victory Markets, LLC (mlollar) Jul 15 2010 at 17:32
I see, and I agree. Drawdown should be represented as a percentage of the overall dollar value of the account at the time of the drawdown rather than a percentage of a percentage.

The World's Currency Market is Our Oyster.
winsor

Member Since Jun 23, 2010  302 posts Winsor Hoang () (winsor) Jul 16 2010 at 18:06

cateful posted:
   the way myfxbook calculates drawdown is by measuring the peak-to-trough distance. In this case, the distance is your percent return difference.


People who trade without stop loss will always get very high winning percentage; however, the risk in their accounts is also very high. The drawdown is reflected by measuring peak to trough distance.

zebra

Member Since Aug 10, 2010  55 posts Zebra (zebra) Aug 11 2010 at 04:05
We obviously need two types of Drawdown.

1.) For Your Closing Loss - The Drawdown damage of that Losing trade

2. Equity Drawdown - The Swing Percentage from when you Open a position and when you close a Position. Display a Simple Candle for each Trade. Open- High- Low- Close.

Now we have an accurate way to determine who has a High Risk appetite and who is willing to close at a Loss. Many systems are scared to have a Loss, Therefore their Drawdown percentage does not reflect the True Equity Drawdown.

Zebras may look identical. However, this Zebra is extraordinary
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