Wrong formula for Calculating drawdown.

Created at 27 Aug 2020, 15:33
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chillx

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Joined 05.08.2020

Wrong formula for Calculating drawdown.
27 Aug 2020, 15:33

Can you explain how the Max Balance Drawdown of this strategy is only 1.23%? You can clearly see in the graph that it went from 45.61% to -7.56%. Please check and rectify your algorithm for calculating the Max Balance Drawdown. This is so misleading to the investors.

@chillx
Replies

PanagiotisCharalampous
27 Aug 2020, 15:46 ( Updated at: 21 Dec 2023, 09:22 )

Hi heychirag,

You are looking at the wrong chart. ROI has nothing to do with balance drawdown. Here is the correct one

Best Regards,

Panagiotis 

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@PanagiotisCharalampous

chillx
27 Aug 2020, 15:59

But even in this Graph, the Equity dropped from 3655 to 2186. Which is a drawdown of 40%. By definition drawdown is how much the balance goes below the original balance between the opening and closing of a position.

@chillx

PanagiotisCharalampous
27 Aug 2020, 16:03

Hi heychirag,

You are confusing balance and equity. They are a different thing. Max Balance Drawdown refers to the drawdown between balances, not between balance and equity. So you should be checking the yellow line only.

 

Best Regards,

Panagiotis 

Join us on Telegram

@PanagiotisCharalampous

chillx
27 Aug 2020, 16:45

Hmm okay. Maybe other trading platforms have a different definition for it and you have a different one. But still it would be nice to know how much does the equity drops at max (before taking profit) from the current balance between each position. Gives you an idea how much risk does a strategy provider takes.

@chillx
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