EA Forex Academy – Algorithmic & Manual Trading Courses Forums Forex Trading Forum Max equity drawdown – per trade or for entire account?

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  • #63062
    colin-chad
    Participant

    Hello,

    I’ve been experimenting with the Generator and the Reactor.  In Tools –> Configuration –> Acceptance Criteria –> Complete Backtest does “Maximum equity drawdown %” mean the maximum equity drawdown per trade at the chosen lot size, or is it the maximum equity drawdown over the time period covered by the historical data?

    Suppose I don’t want to exceed 10% drawdown on my total starting balance in my demo account ($100k) at any time. If I’m trading micro lots (0.01 lot) this means I’m risking 1% of my starting account balance on each position. I could afford to have a drawdown of greater than 10% (say, 12%) on a trade that only represents 1% of my starting account balance, since that would be a 12% loss on 1% of my account balance. If this is how the drawdown works in the Generator/Reactor, then I might want to set “Maximum equity drawdown %” greater than 10% for micro lot trades if my goal is to stay under 10% drawdown for the account overall.

    Again, the question is does “Maximum equity drawdown %” mean the maximum equity drawdown per trade at the chosen lot size, or is it the maximum equity drawdown over the time period covered by the historical data?

    I look forward to your guidance. Thank you.

    Colin

    #63131

    Hey Colin,

    Your calculations are precise. It means the Max Equity Drawdown over the whole period you are testing the account.

    Cheers,

    #63138
    colin-chad
    Participant

    Thanks, Petko!

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