Relative Drawdown

[desert]

Hi,

I would like to know how the Relative Drawdown is calculated. I have googled and read other explanations, but it seems everybody has a different answer and opinion.

I know that Absolute Drawdown is the maximum amount under the initial deposit we got in the simulation.

Also, I have understand the Maximal Drawdown is the maximum peak in the equity with his following mimimum.

Therefore, rather than an explanation with words about Relative Drawdown, I need an example with numbers or formulas if possible.

Thanks in advance.

[gordon]

https://www.mql5.com/en/forum/125644

[desert]

gordon:
https://www.mql5.com/en/forum/125644

Hi gordon, thanks for your answer, but I'm affraid the explanation are not clear at all for me, I still have doubts about Relative DD.

Is it possible to have an example with numbers?

[Ubzen]

https://www.mql5.com/en/forum/123865

Relative Drawdown is the highest Max-Drawdown in Percentage during the test period.

Example: You start with 100$. On your first trade your Equity goes down to 1$. You just suffered a 99% Maximum Drawdown and Relative Drawdown will Lock that as the highest draw-down it's ever seen in Percentage.

Then your luck turns around and price spikes into your direction bringing you to 1000$. But you say No-"I'm not gonna close that order until I make it to $10,000. But the market says, "I'm due for a retrace" and starts going against you again and Equity drops to 800$.

At this point Fear kicks in and you say "Enough-is-Enough" and close the order. The Maximum-Drawdown as defined is 200$ Dollars. Yes Maximum Drawdown looks at the Cha$-Chang$. And where was Equity before it toke that draw-down, 1000$. The Max-Drawdown in % is 20 ($1000-$-200 which brought you to $800).

Relative draw-down does not care about the 20% because thats not the Highest Draw-down it's seen in Percentage. So it reports what it'd seen which is 99%.

[desert]

ubzen:

https://www.mql5.com/en/forum/123865

Relative Drawdown is the highest Max-Drawdown in Percentage during the test period.

Example: You start with 100$. On your first trade your Equity goes down to 1$. You just suffered a 99% Maximum Drawdown and Relative Drawdown will Lock that as the highest draw-down it's ever seen in Percentage.

Then your luck turns around and price spikes into your direction bringing you to 1000$. But you say No-"I'm not gonna close that order until I make it to $10,000. But the market says, "I'm due for a retrace" and starts going against you again and Equity drops to 800$.

At this point Fear kicks in and you say "Enough-is-Enough" and close the order. The Maximum-Drawdown as defined is 200$ Dollars. Yes Maximum Drawdown looks at the Cha$-Chang$. And where was Equity before it toke that draw-down, 1000$. The Max-Drawdown in % is 20 ($1000-$-200 which brought you to $800).

Relative draw-down does not care about the 20% because thats not the Highest Draw-down it's seen in Percentage. So it reports what it'd seen which is 99%.

Totally clear now.

Thanks a lot.

[Dimitar Petkov]

The official explanation about MaxDrawdown and RelativeDrawdown is here: https://www.metatrader5.com/en/terminal/help/trading_advanced/history_report#drawdown

This is an example caculation for a Balance, but for Equity is made in the same way.

[Shekwolo Dogo Israel]

Ubzen #:

https://www.mql5.com/en/forum/123865

Relative Drawdown is the highest Max-Drawdown in Percentage during the test period.

Example: You start with 100$. On your first trade your Equity goes down to 1$. You just suffered a 99% Maximum Drawdown and Relative Drawdown will Lock that as the highest draw-down it's ever seen in Percentage.

Then your luck turns around and price spikes into your direction bringing you to 1000$. But you say No-"I'm not gonna close that order until I make it to $10,000. But the market says, "I'm due for a retrace" and starts going against you again and Equity drops to 800$.

At this point Fear kicks in and you say "Enough-is-Enough" and close the order. The Maximum-Drawdown as defined is 200$ Dollars. Yes Maximum Drawdown looks at the Cha$-Chang$. And where was Equity before it toke that draw-down, 1000$. The Max-Drawdown in % is 20 ($1000-$-200 which brought you to $800).

Relative draw-down does not care about the 20% because thats not the Highest Draw-down it's seen in Percentage. So it reports what it'd seen which is 99%.

Thanks for this detailed explanation! God bless you!