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Drawdown Calculation Vote Results

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Victory Markets, LLC (mlollar)
Jul 15 2010 at 14:09
44 posts
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 https://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.
Fill or Kill (cateful)
Jul 15 2010 at 16:47
87 posts
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.

Victory Markets, LLC (mlollar)
Jul 15 2010 at 17:32
44 posts
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.
CTSForex (winsor)
Jul 16 2010 at 18:06
303 posts

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 (zebra)
Aug 11 2010 at 04:05
55 posts
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.

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