Hello Guest, if you are reading this it means you have not registered yet. Please take a second, Click here to register, and in a few simple steps you will be able to enjoy all the many features of our fine community. Note that lewd or meaningless nicknames are prohibited (no numbers or letters at random) and please introduce yourself in the section for you to meet our community.
pcm brokers pcm brokers
Results 1 to 6 of 6
  1. #1
    Trader
    Join Date
    Apr 2020
    Location
    Bangladesh
    Posts
    70
    Post Thanks / Like
    Credits
    124
    My Language
    English

    How To Calculate Forex Drawdown?

    A Forex drawdown is a measuring tool commonly used by all types of investors, including forex traders, in order to determine the potential risk involved in an investment. Forex traders typically use the drawdown function to monitor the performance of their trading strategies.

    The drawdown is usually shown as a percentage (%) and is plotted over time to show change over time. It represents a loss or potential loss in the value of an investment, usually after a series of losing trades. Due to its direct link to performance and risk management, many forex traders use drawdown as a tool to identify weaknesses in their trading strategy.

    Drawdown Formula
    Below is a statistical formula for calculating the drawdown amount or % of a specific investment or portfolio.

    Forex Drawdown
    Where:

    D(T) = Drawdown Time
    t = Peak
    T = Trough
    X = Variables
    Drawdown Example:

    For a simple explanation of how drawdown is calculated, let's say, for example, you have a $10000 trading portfolio. The equity in your account drops to $8000 after a bad trade or a losing streak.

    Answer: You lose $2000. The account decreased from $10000 to $8000 reflecting a 20% decrease.

    10000 (Peak) – 8000 (Through) = (2000 ÷ 10000) × 100 = 20%

    Types of Forex Drawdown
    Drawdowns used in forex trading can be divided into three types. These terms are crucial for checking the performance of a portfolio before investing or trading. Furthermore, we can use these different types of drawdowns to determine the potential losses of capital that we might face if we were to use this trading system.

    Relative Drawdown
    A relative drawdown reflects unrealized losses. As long as you hold onto your position, drawdowns are temporary and only become apparent once your stop-loss is triggered or when you close your position.

    Relative drawdown is the difference between the maximum equity high to maximum equity low, it is not fixed as it is measured on the equity.

    Relative Drawdown = Maximum value of equity – Minimum value of equity

    Relative Drawdown in % = (Max equity value – Min equity value) / (max ⁡equity value) ×100

    Absolute Drawdown
    Absolute drawdown represents the difference between the initial deposit and the smallest equity value, showing how much the equity has fallen below the deposit level. The absolute drawdown only occurs when the account value drops below the initial deposit.

    Absolute Drawdown formula = Initial Deposit– smallest equity value

    Absolute Drawdown in % = (Initial Deposit – smallest equity value) / (Initial Deposit) ×100

    Absolute Drawdown helps to evaluate the results of a trading account.

    Maximum Drawdown
    Maximum drawdown is the difference between an all-time high to the all-time low of an account balance.

    Max Drawdown Formula = All-time high balance – All-time low balance

    Max DD in %= (All-time high balance – All-time low balance) / (All-time high balance) ×100

    Maximum drawdown indicates potential downside risk over a given period.

    You can learn more about forex drawdown and forex trading strategy and tips at this forex trading forum.

    forum.forex

  2. #2
    Senior Trader
    Join Date
    Dec 2020
    Location
    Asia
    Posts
    181
    Post Thanks / Like
    Credits
    262
    My Language
    English
    It becomes important for the traders to try and reduce their drawdown.
    FXOpen - one of the most successful and fastest-growing Forex brokers.
    UK & AU regulated. ECN, STP, Crypto, Micro, PAMM accounts.

  3. #3
    Trader
    Join Date
    Dec 2021
    Posts
    80
    Post Thanks / Like
    Credits
    82
    My Language
    English
    It is best that the drawdors of the trading account are at all

  4. #4
    Senior Trader
    Join Date
    Dec 2020
    Location
    Asia
    Posts
    181
    Post Thanks / Like
    Credits
    262
    My Language
    English
    Quote Originally Posted by Foget View Post
    It is best that the drawdors of the trading account are at all
    If we will do our trading safely then the income we are getting will also get increased.
    FXOpen - one of the most successful and fastest-growing Forex brokers.
    UK & AU regulated. ECN, STP, Crypto, Micro, PAMM accounts.

  5. #5
    Trader
    Join Date
    Dec 2021
    Posts
    80
    Post Thanks / Like
    Credits
    82
    My Language
    English
    How to make trade safely?

  6. #6
    Senior Trader
    Join Date
    Dec 2020
    Location
    Asia
    Posts
    181
    Post Thanks / Like
    Credits
    262
    My Language
    English
    Quote Originally Posted by Foget View Post
    How to make trade safely?
    When we are doing our trades correctly we will be able to get the profits on time.
    FXOpen - one of the most successful and fastest-growing Forex brokers.
    UK & AU regulated. ECN, STP, Crypto, Micro, PAMM accounts.

  7. ARIONFORXtarder
 

 

Tags for this Thread

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  
Powered by vBulletin® Version 4.2.5
Copyright © 2022 vBulletin Solutions Inc. All rights reserved.
Credits System provided by vBCredits II Deluxe v2.1.1 (Pro) - vBulletin Mods & Addons Copyright © 2022 DragonByte Technologies Ltd.
Feedback Buttons provided by Advanced Post Thanks / Like v3.3.0 Patch Level 2 (Lite) - vBulletin Mods & Addons Copyright © 2022 DragonByte Technologies Ltd. Runs best on HiVelocity Hosting.
All times are GMT +4. The time now is 09:57 AM.
CompleteVB skins shared by PreSofts.Com