#### Topic: Difference between Maximum Drawdown and Max Equity Drawdown

hello,

I'm trying to determine the Difference between Maximum Drawdown and Max Equity Drawdown statistics....the statistics I'm running are showing a Min. Account Value that does not equal the Maximum Drawdown

Attached is a FSB which shows this discrepancy. Thanks for any help

#### Re: Difference between Maximum Drawdown and Max Equity Drawdown

They can, but do not necessarily have to be equal, because max DD is not the same as min account balance.

#### Re: Difference between Maximum Drawdown and Max Equity Drawdown

Just to clarify, the min account balance is the lowest balance of the account realized over the duration of the strategy. max dd is the lowest the account has gone down (but not lower the min. account balance.)

for example.
(A) an account balance starts at 1000.
(B) goes down to 950.
(C) goes up to 2000
(D) goes down to 1250.

From A to B, the min account balance (950) is realized (-50), but from C to D the max drawdown is realized (-750). Would this be accurate?

footon wrote:

They can, but do not necessarily have to be equal, because max DD is not the same as min account balance.

#### Re: Difference between Maximum Drawdown and Max Equity Drawdown

That's exactly how I understand it.

binaryoptions wrote:

Just to clarify, the min account balance is the lowest balance of the account realized over the duration of the strategy. max dd is the lowest the account has gone down (but not lower the min. account balance.)

for example.
(A) an account balance starts at 1000.
(B) goes down to 950.
(C) goes up to 2000
(D) goes down to 1250.

From A to B, the min account balance (950) is realized (-50), but from C to D the max drawdown is realized (-750). Would this be accurate?

footon wrote:

They can, but do not necessarily have to be equal, because max DD is not the same as min account balance.

#### Re: Difference between Maximum Drawdown and Max Equity Drawdown

Hello footon
i still didn't get the difference between Maximum Drawdown And Maximum equity drawdown  , And why MDD always< MEDD

#### Re: Difference between Maximum Drawdown and Max Equity Drawdown

Maximum drawdown refers to Balance line.
Maximum equity drawdown refers to equity line.

Deviations of equity line are greater or equal to deviations of balance line.

#### Re: Difference between Maximum Drawdown and Max Equity Drawdown

Popov wrote:

Maximum drawdown refers to Balance line.
Maximum equity drawdown refers to equity line.

Deviations of equity line are greater or equal to deviations of balance line.

Thanks  But the calculations used for both MDD curves use bytrade or use maximum swings !!!!!

attched picture shows Why iam asking that

Kindly elaborate more

#### Re: Difference between Maximum Drawdown and Max Equity Drawdown

Popov wrote:

Maximum drawdown refers to Balance line.
Maximum equity drawdown refers to equity line.

Deviations of equity line are greater or equal to deviations of balance line.

Thanks  But the calculations used for both MDD curves use bytrade or use maximum swings !!!!!

attched picture shows Why iam asking that

Kindly elaborate more

#### Re: Difference between Maximum Drawdown and Max Equity Drawdown

This picture is very clear.

Maximum drawdown is the very small drop of balance line after the first red ellipse.
Maximum equity drawdown is the third ellipse you have marked. 600 =  11500 - 10900
Equity percent drawdown  5% = 100* 600 / 11500

All above numbers are rounded