Drawdown calculation

[nitinz]

Hello everybody,

I just read the following draw-down calculation method as a rule of one of the trading competition.

Maximum drawdown = (Peak value before largest drop-Lowest value before new high established)/(Peak value before largest drop)

Generally MT4 only takes closed trades into account (balance) and does not record change in equity.

for Example if I start with $15000 and open a trade. It goes with my favour with Profit +$1000( now my equity is 16000). but suddenly it turn against me and now the P/L is -$500(equity = 14500). After some time I closed the trade with profit +$200 and my equity is $15200.
According to the rule my drawdown is 9.37%
drawdown=(16000 - 14500)/ 16000.

But MT4 will show the zero drawdown because I closed the trade with profit $200. I agree with them that MT4 drawdown is not accurate and also dangerous.

My question is that, How can we know my Peak value or lowest value of my equity? Especially when I am not in front of my Computer(MT4), so that I calculate the drawdown according to the rule above.
The brokers’ server may record it, but is any indicator available for MT4?

Thaking you,
nitin

[lexys]

But MT4 will show the zero drawdown because I closed the trade with profit $200.

[I]Strictly speaking[/I], I suppose it’s correct, because what you’re referring to above as drawdown is actually “adverse excursion”, which is what you want to record, rather than really “drawdown” [I]per se[/I].

I agree with them that MT4 drawdown is not accurate and also dangerous.

I also agree, of course. It’s terribly misleading.

The brokers’ server may record it, but is any indicator available for MT4?

This I don’t know, Nitin, I’m afraid (I no longer use MT) and I’m bumping your thread partly out of surprise at the lack of answers. But what you’re (wisely) looking for is something that records “adverse excursions”, rather than just “drawdown”.