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James Lacbay
James Lacbay 2016.09.28 07:44 

On the Detailed Report of my account on my MT4, the Maximal Drawdown is only at 2.65% but on my signal's Maximum Drawdown, it shows 56.51% (Current drawdown is dangerous for subscribers. Subscription will be allowed once drawdown improves) therefore Subscription not permitted. Can someone from MLQ5 or anyone knowledgeable provide an explanation about the difference?

Thank you.

Sergey Golubev
Sergey Golubev 2016.09.28 08:20  

I am not from MQ but this is what I found:

Forum on trading, automated trading systems and testing trading strategies

Is Relative DrawDown terminology identical to Absolute Draw Down ?

Michele Lazzarini, 2014.08.09 02:16

Absolute: compared to initial balance

Maximal: largest drawdown (measured in currency)

Relative: largest relative drawdown (measured in %)
This because you can have an early drawdown big in % but not in currency.
The Maximal can hide a largest drawdown in % happened earlier.

Relative is an index of resistance to drawdowns and can be used to compare different results.

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To assess performances i find useful this expression:

Efficacy = Net Profit / Gross Profit

this can be used combined with Relative Drawdown, to assess the real reliability of a strategy:

Reliability = Efficacy / Relative Drawdown

There are many 'drawdowns' in the world:

  • Absolute
  • Maximal
  • Relative
  • Maximum drawdown on equity open trades
  • may be more.

I am not sure which kind of drawdown is used for the signals (I think, it may be 'Maximum drawdown on equity open trades' as maximum possibe drawdown) but you can read the following:

Article: What the Numbers in the Expert Testing Report Mean

Small thread: Is Relative DrawDown terminology identical to Absolute Draw Down ?

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