Drawdown – Max DD and Avg DD % (as used in the TradingLog sheet)
This is the peak-to-trough decline during a specific period of trades, expressed as a percentage between the peak and the trough. It is measured from the time a retrenchment begins to when a new high is reached.
This method is used because a valley can’t be measured until a new high occurs. Once the new high is reached, the percentage change from the old high to the smallest trough is recorded.
- Note: Max DD and Avg DD cells may not populate until after a string of trades have been recorded (and exited), and you may see these calculations (in the TradingLog) disappear from time to time as new results are being established.
Posted in: Trading Terminology (general product terms)