Drawdown - Balance or Equity?

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Ernest Klokow
1149
Ernest Klokow  

I have always believed that the drawdown reported in MT4 was calculated based on the Balance of the account. I just read an article that says it is actually calculated on the Equity. Now I am confused because when I generate a report in MT4 the graph shows clearly "Balance" written in the top left corner. There is also no additional Equity graph in this report.

Mohammed Mounir
1014
Mohammed Mounir  
Ernest Klokow:

I have always believed that the drawdown reported in MT4 was calculated based on the Balance of the account. I just read an article that says it is actually calculated on the Equity. Now I am confused because when I generate a report in MT4 the graph shows clearly "Balance" written in the top left corner. There is also no additional Equity graph in this report.

Hi Ernest,

the drawdown based on equity as there are lot of brokers give bonus offer added to the real balance, it could be 50% of your deposit EX: 100$ deposit 50$ bonus the total equity will be 150$

Ernest Klokow
1149
Ernest Klokow  
Mohammed Mounir:

Hi Ernest,

the drawdown based on equity as there are lot of brokers give bonus offer added to the real balance, it could be 50% of your deposit EX: 100$ deposit 50$ bonus the total equity will be 150$

Thanks Mohammed! Not sure though what the broker's bonus has to do with the difference between Balance and Equity. Are you sure you are not referring to MT5 which I know can report drawdown on Equity? Why is there no Equity graph in the MT4 report? And why does it say clearly "Balance" on the graph?

Ernest Klokow
1149
Ernest Klokow  
The other thing is that the graph in MT4 is only updated AFTER the trade has closed - which means it is based on the Balance. You can see this clearly when you run an EA in the Strategy Tester.
Mohammed Mounir
1014
Mohammed Mounir  
Ernest Klokow:
The other thing is that the graph in MT4 is only updated AFTER the trade has closed - which means it is based on the Balance. You can see this clearly when you run an EA in the Strategy Tester.

I tried it before on MT4 and the drawdown was calculated on the Equity as total money plus bonus, if there is no bonus the equity and balance will be the same

Ernest Klokow
1149
Ernest Klokow  
Mohammed Mounir:

I tried it before on MT4 and the drawdown was calculated on the Equity as total money plus bonus, if there is no bonus the equity and balance will be the same

Mohammed sorry but I don't think you understand the difference between Balance and Equity.

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