Price signals, what will happen to them? - page 8
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The drawdown should also be counted against funds. Balance is nothing and funds are everything!
Yusuf, give us a definition of balance, funds and drawdown -- which you use.
Because funds are the skin of the bear (today you are on the horse, tomorrow you are under the horse, and the day after Uncle Kolya stopped out everything and showed your real funds on your balance).
Drawdown on funds is always equal to zero.
drawdown can only be calculated relative to something -- either from a previously reached maximum (that's something like "eh, didn't close") or from the balance (or funds at the beginning of the trading cycle).
p.s. noticed that there are a lot of "fool yourself or the investor" style indicators in statistical trading metrics.
It is important for me to control the funds and I don't even look at the balance.
If there are funds, there will be a balance. If there are no funds, the balance is of no help.
Most profitable trading is when the funds exceed the balance.
When profitable positions are held and unprofitable ones are deleted.
All current trade figures(open positions) are all relative to a reference point.
The balance is a reference point.
This is used to calculate the profit/loss of the open positions, the drawdown - the decision to close the position (or fix the trading results) is made based on the ratio of equity and the balance.
Therefore, one can "not look at the balance" and it is cool to say "balance is nothing" - but all calculations are based on the "balance", no matter what anyone says.
At least -- no one has yet substantiated anything but blah-blah to the contrary.
Yusuf, give us a definition of balance, funds and drawdown -- which you use.
Because funds are the skin of the bear (today you are on the horse, tomorrow you are under the horse, and the day after Uncle Kolya stopped out everything and showed your real funds on your balance).
Drawdown on funds is always equal to zero.
drawdown can only be calculated relative to something -- either from a previously reached maximum (that's something like "eh, didn't close") or from the balance (or funds at the beginning of the trading cycle).
p.s. i have noticed that in statistical trading metrics -- there are a lot of "fool yourself or the investor" style metrics.
All current trade figures(open positions) are all relative to a reference point.
The balance is a reference point.
This is used to calculate the profit/loss of the open positions, the drawdown - the decision to close the position (or fix the trading results) is made based on the ratio of equity and the balance.
Therefore, one can "not look at the balance" and it is cool to say "balance is nothing" - but all calculations are based on the "balance", no matter what anyone says.
At least -- no one has yet substantiated the contrary, apart from blah-blah.
So as not to explain for a long time what is more important - balance or equity, I will lead you to the obvious analysis, and everything becomes clear at once: always when we close all the open positions, no matter with a profit or with a loss, the balance tends to equity, not vice versa! Therefore funds are a true measure of the account balance at any given time. The balance is the pelt of the unkilled bear. The drawdown should also be counted from the funds as well as the gains.
So I'm not even ready to get into an argument with you -- just show me how you calculate drawdown by means -- and then we'll move on.
Because the way I see it -- drawdown from funds is zero -- unless the drawdown is calculated from the chimerical maximums in drawdown achieved.
Drawdown, % = (Balance - Funds) / Balance * 100%
At the starting point, balance = means. It is a big mistake when, indeed, all calculations are based on balance. I wonder how such a fatal mistake can be made systematically and fundamentally.
Yusuf -- you amaze me, how can you speak so long without proofs -- make formulaic calculations and you can say nothing with words at all.
First of all, just show how you calculate "drawdown by means" - and then you can say nothing - everything will be clear [with you] at once.
... balance should not be considered an advantage over funds. ...
no one sees the balance as an advantage.
having money in an account is funds.
But the current state of trade is assessed in relation to the balance as a reference point - this is not the same as counting balance as an advantage over funds.
So I'm not even ready to get into an argument with you -- just show me how you calculate drawdown by means -- and then we'll move on.
Because the way I see it -- drawdown from funds is zero -- unless the drawdown is calculated from the chimerical maximums in drawdown achieved.
Drawdown, % = (Balance - Funds) / Balance * 100%
It is a mistake to include balance in the calculation. It should be like this:
1. Drawdown, % = (Maximum approved funds - minimum approved funds)/(maximum approved funds) *100%;
2 Absolute drawdown, % = (initial Means - minimum Means turned out)/(initial Means) *100%;
(3) Current drawdown, % = (maximum Assets - current Assets)/(maximum Assets reached) *100%;
Relative drawdown, % = (maximum Assets - minimum Assets) / (initial Assets) *100%;
no one sees the balance as an advantage.
having money in an account is funds.
But the current state of trade is measured in relation to the balance as a reference point - that is not the same as considering the balance as an advantage over funds.