Reitings: Empty Star Empty Star Empty Star Empty Star Empty Star
growth graph equity line
Iepriekšējās 1 2 Nākamais
gmfx

Biedrs kopš Apr 09, 2011  8 ieraksti gmfx May 25 2011 at 22:58
I don't understand how the equity line is supposed to be calculated in the growth graph.
Can anyone help?
Thanks

speki

Biedrs kopš Nov 18, 2009  735 ieraksti speki May 28 2011 at 19:30
Equity is your balance plus minus profit or loss on your open trades.
Suppose you have 1K balance and +100 profit on open trades (that's 10% of the balance).
Equity would show 110%.
Savvy?

Surround yourself with people whose eyes light up when they see you and who have no agenda for your reform.
gmfx

Biedrs kopš Apr 09, 2011  8 ieraksti gmfx May 29 2011 at 12:57 (labots May 29 2011 at 13:01 )
Thanks for your reply, speki.

The concept of equity is very clear.
But that's not my problem.

My problem is with the growth chart.
It shows the line of growth of the account (in red) and the line of growth of the equity held for that account (in yellow).
The problem is that the equity growth is definitely very different from what this graph seems to indicate.
For instance, my account shows a growth of about 110% (which makes perfect sense, since the account started at $50k and has now reached about $105k so +$55k), however it also shows a growth of equity of about 60% when my equity is next to $60k. Now this doesn't make any sense: in this case the equity growth is no more than 20%. So where does that value of 60% come from? One might think, ok that's not the growth in equity, it's only how much equity you're holding against your balance. But that's also not possible because it would have to start at 100%, instead it starts at 0% just like the balance growth and it grows along with it although following the ups and down of the equity (but how exactly?).

In conclusion, the growth chart only gives an indication about the balance growth, while the equity growth line simply doesn't make any sense (to me now).

I'd be grateful if anyone form myfxbook could explain this.

Many thanks

Staff

Biedrs kopš Jul 31, 2009  1360 ieraksti Ethan (Staff) May 29 2011 at 14:37
The growth's equity line is consistent with the balance's equity line in percent. For your last point, equity is at 56.29%, so if referring to the current growth, it is the 106.59%*56.29%=~60% which is what is seen in the chart.

Let me know if it's still unclear.

gmfx

Biedrs kopš Apr 09, 2011  8 ieraksti gmfx May 30 2011 at 12:03
Hi Ethan,

Thanks a lot for answering this.

However, I have to say this doesn't make a lot of sense to me: if this was right the equity line should start at 100%, right?
Why does it start at 0%, then?

I would expect any growth chart to start at 0%.
But what's the purpose if it plots a figure of ~60% when the actual increase is only ~20%?
That's a very large difference and the value that would be most informative about the system is the ~20% growth in equity, rather than the fact that equity is at ~60% of account balance in that moment (while it's still unclear why it starts at 0% instead of 100%)

Even worse: when the equity growth went in the negative (meaning my system had open trades losing more than it had earnt) the equity growth indicates a positive value of about 10% while in truth I had an equity of ~$35k, thus making a loss of ~30% on $50k.

I understand the growth line must be progressive and independent of the amount actually in the account, but it should also be indicative of the actual increase or decrease of the amount it tracks, be it the account balance or the equity held for that account.

I'm not expecting the MyFXbook team to change the way charts are displayed, but I must say I'd appreciate much more a growth chart that plots the actual growth of the equity as well as that of the balance of a given account.

I think this would give better indication to all traders.

Please correct me if I'm wrong.

Thank you :)

Staff

Biedrs kopš Jul 31, 2009  1360 ieraksti Ethan (Staff) May 30 2011 at 12:10
That's simply a different visual plot of the same data smiley

The equity line is plotted as a percentage of the growth at each data point which would explain why it starts at 0% - the growth starts at 0% and 100% (equity) of 0% is still 0%.

In any case, I will forward your request to the development team for review.

Thanks.

gmfx

Biedrs kopš Apr 09, 2011  8 ieraksti gmfx May 30 2011 at 14:41 (labots May 30 2011 at 14:53 )
Ok, thanks for making this clear, Ethan, but still how meaningful is it?

It leads us to compare an increment (that of the account balance) not with the increment in equity for that account, but with the portion of equity held for that account scaled down by the increment of the account!! (perverse!)

What information do we gather from such comparison?

It's not just useless, it's misleading ... think about it ... (ultimately it's dimensionally wrong: we must compare increments with increments)

If you want to check the growth of a system as an indication of its performance you want to look at the increment (positive or negative) it has produced on the account balance AND on the equity.

If I have a 20% increment in equity, I don't want to read a chart that shows my equity at 60% of the increment on balance!
If my trading system produces a 30% loss in equity, I don't want to see a chart that plots a positive figure of 10% for my equity 'growth'!

Do you see my point?

Thanks for your response and for submitting this to the development team

Staff

Biedrs kopš Jul 31, 2009  1360 ieraksti Ethan (Staff) May 30 2011 at 15:02

gmfx posted:
    Ok, thanks for making this clear, Ethan, but still how meaningful is it?

It leads us to compare an increment (that of the account balance) not with the increment in equity for that account, but with the portion of equity held for that account scaled down by the increment of the account!! (perverse!)

What information do we gather from such comparison?

It's not just useless, it's misleading ... think about it ... (ultimately it's dimensionally wrong: we must compare increments with increments)

If you want to check the growth of a system as an indication of its performance you want to look at the increment (positive or negative) it has produced on the account balance AND on the equity.

If I have a 20% increment in equity, I don't want to read a chart that shows my equity at 60% of the increment on balance!
If my trading system produces a 30% loss in equity, I don't want to see a chart that plots a positive figure of 10% for my equity 'growth'!

Do you see my point?

Thanks for your response and for submitting this to the development team


I see your point, but the chart is a cumulative growth/balance plot.

The equity plot is relative to the growth and cumulative, so it's useful to see over time how it diverges/converges from the growth/balance.

I'm not sure why you think it's useless, as what you're asking is the same plot, only in absolute terms, not relative smiley.

In any case, as mentioned before I've already forwarded your suggestion to the development team. Your feedback is much appreciated!

speki

Biedrs kopš Nov 18, 2009  735 ieraksti speki May 30 2011 at 16:17
Man, for a year and a half, I thought this was useful and informative. Especially the convergences / divergences, equity crossing / touching the main growth curve. Now I have to learn it's perverse and useless. I need my head checked ASAP.

gmfx, could we keep shtum about this? It's gonna be fun to watch the other few thousand members fooling themselves with those useless equity curves lol lol lol

Surround yourself with people whose eyes light up when they see you and who have no agenda for your reform.
gmfx

Biedrs kopš Apr 09, 2011  8 ieraksti gmfx May 30 2011 at 16:22
It remains that the current growth chart instead of comparing balance growth with equity growth, compares balance growth with the total value of equity proportion of balance scaled down by the balance growth ... meaningful?

I'm really not sure of the use of this, of one thing I'm sure: it's misleading to plot these two lines together in what's called a growth chart.

From a growth chart I expect to see how a trading system has performed on a given account in terms of (relative) balance growth and (relative) equity growth, if either goes in the negative it must show so.

With a bit of (tedious) math, just to make thing crystal clear:

b = balance [$] = b(t)
e = equity [$] = e(t)
t = time [days]
d = increment (delta): dt = t2-t1, db = b(t2)-b(t1), de = e(t2)-e(t1)

daily balance growth: b' = db/dt
daily equity growth: e' = de/dt
relative balance growth: b'/b
relative equity growth: e'/e

equity proportion of balance: e/b

Why not plot b'/b with e'/e instead of b'/b with e/b*b'/b?

Note that b is very different from b'/b and e is very different from e'/e.
Besides, in the chart of b with e, deposits and withdrawals are also taken into account, while they wouldn't show in the chart of b'/b with e'/e.

Thanks again and look forward to the response from the development team

Iepriekšējās 1 2 Nākamais
Imports (YoY) (14h 28min)
The Wall Street Journal: Pope Francis re...(9h 34min ago)
EURUSD 1.24099 GBPUSD 1.40256
USDJPY 106.286 USDCAD 1.25521
FxPro

Tools

Kopiena

Apskats

Brokeri

Platforma

Atbalsts


Twitter |  Facebook |  Lapas karte  |  Noteikumi  |   Privacy Policy
©2014 Myfxbook Ltd. All Rights Reserved.
HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance. You could lose some or all of your initial investment; do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions. Any data and information is provided 'as is' solely for informational purposes, and is not intended for trading purposes or advice.