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Discussion of article "The Easy Way to Evaluate a Signal: Trading Activity, Drawdown/Load and MFE/MAE Distribution Charts"

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MetaQuotes Software Corp.
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MetaQuotes Software Corp.  

New article The Easy Way to Evaluate a Signal: Trading Activity, Drawdown/Load and MFE/MAE Distribution Charts has been published:

Subscribers often search for an appropriate signal by analyzing the total growth on the signal provider's account, which is not a bad idea. However, it is also important to analyze potential risks of a particular trading strategy. In this article we will show a simple and efficient way to evaluate a Trading Signal based on its performance values.

The account balance and equity values of each signal are monitored since the account registration in the Signals service. The difference between these values ​​is positive, if currently open positions show a floating profit. But if the equity is less than the balance value, it means that the trading account is having a drawdown or unrecorded loss.

Author: MetaQuotes Software Corp.

Increase volume signal
1103
Increase volume signal  

Thank you! I understand!

Jere Katainen
158
Jere Katainen  

EXCELLENT ARTICLE! 

Everyone involved in forex, especially in expert advisors, should read this.  

Somsri Sarkar
3809
Somsri Sarkar  
Thank you, its very helpful. 
Pham Duy Duc
681
Pham Duy Duc  
very detailed article. Thank you very much.
Walleee
6
Walleee  
Thank you for a very useful article. However, I couldn't understand the drawdown chart section. Can anyone helps me please? 1) "Review the chart of drawdown over the entire signal monitoring period in order to understand what was the risk on the account before a position was closed with a profit." How can I determine the potential risk from the chart? 2) "For example, in this case we see that the profit over the trading account lifetime was 18% to 76% per month, while the floating drawdown reached more than 16% in May. Compare the account drawdown and profit to decide if you are ready to lose 18% (or multiply it by 3, that is 18 * 3 = 54%) of the deposit if the same drawdown happens on the provider's account again”. Why did the write consider that 18% is a loss, isn't that a profit from May? Also, why should I multiply it by 3? Where did this 3 came from? Lastly, is the drawdown 54% or 18%? I'm sorry if these questions seemed obvious, I'm beginner and I'd really appreciate if someone explains to me. Thank you :)
7268935 Lam
24
7268935 Lam  
Walleee:
Thank you for a very useful article. However, I couldn't understand the drawdown chart section. Can anyone helps me please? 1) "Review the chart of drawdown over the entire signal monitoring period in order to understand what was the risk on the account before a position was closed with a profit." How can I determine the potential risk from the chart? 2) "For example, in this case we see that the profit over the trading account lifetime was 18% to 76% per month, while the floating drawdown reached more than 16% in May. Compare the account drawdown and profit to decide if you are ready to lose 18% (or multiply it by 3, that is 18 * 3 = 54%) of the deposit if the same drawdown happens on the provider's account again”. Why did the write consider that 18% is a loss, isn't that a profit from May? Also, why should I multiply it by 3? Where did this 3 came from? Lastly, is the drawdown 54% or 18%? I'm sorry if these questions seemed obvious, I'm beginner and I'd really appreciate if someone explains to me. Thank you :)
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