Topic: Max Drawdown - Calculation clarification
I have an account with 1,000...I make a portfolio and the profit is 5,000 so balance is 6,000. It says Max drawdown is 13%..these are EA STUDIO BACKTEST numbers. MT4 has similar numbers
I am assuming over the period of 2 years backtest...at any given time I can see floating P&L go down by 6,000*13%= -780
So during the trading if I see it go below -780 (more negative) then I should review the performance.
The reason why I ask is that over the period of 2 years backtest...my max drawdown was about $400 for a portfolio. I started trading on Jan 4 and it is now on -600. I can understand that I entered the market and was prepared to have a -400 drawdown at any given time but -600 is cause for concern.
Please advise and do suggest what you would do in a situation similar to this.