difference in relative DD by equity when copying signals
The reason I ask is the following: I observed yesterday that the signal's relative DD by equity was at most 6.36%, maybe even lower. (It's hard to tell, because there are 2 lines very close to each other on the diagram). However, I stopped copying the signal, because on my account the relative DD by equity was more than 20%. How is that possible?
There are different types of drawdown so I make a summary post to understand those types (because many users are asking about): post #806
Example:
Forum on trading, automated trading systems and testing trading strategies
MY signal is showing a false drawdown level.
Eleni Anna Branou, 2022.03.18 17:38
Drawdown is not only the live drawdown of open trades, but also the account balance drawdown between high and low points.
You may never had more than a 3-4% live drawdown, but if you had 6-7 consecutive losses of 3%, that adds up to about 20% max drawdown.
- 2016.11.02
- Sergey Golubev
- www.mql5.com
I'm copying a signal using 95% of my deposit and don't copy any other signals on that account. The signal's leverage is 1:300, mine is 1:500. I read the explanation for the calculation of relative lot sizes:
https://www.mql5.com/en/forum/215636
Based on that explanation I would expect that the risk on the signal's account and mine should be approximately the same (100% on signal's account, 95% on mine). By risk I mean that if the signal's account goes down by 1%, I should also lose about 1%. I understand that differences in fees and slippage can have an impact, but let's ignore these for the sake of simplicity. Is my assumption correct or does the difference in leverage mean I have a higher risk?
The reason I ask is the following: I observed yesterday that the signal's relative DD by equity was at most 6.36%, maybe even lower. (It's hard to tell, because there are 2 lines very close to each other on the diagram). However, I stopped copying the signal, because on my account the relative DD by equity was more than 20%. How is that possible?
P.S.: the diagram is up-to-date, because the stats for maximal DD by balance show the trade that caused my account to crash. The slippage on that trade was 2 pips, so it doesn't explain the relative DD that is more than 3 times higher.
Are you copying some indexes or commodities that may have different contract specifications in your broker?
A screenshot of your copied trades would help, especially if you can compare them with the signal's trades.
Are you copying some indexes or commodities that may have different contract specifications in your broker?
A screenshot of your copied trades would help, especially if you can compare them with the signal's trades.
The symbol is XAUUSD, so nothing exotic.
I've attached screenshots of my trade and the signal's trade as well as the relative DD by equity graph. The signal only had this one open trade at that time. My balance was at 21,560.18, the trade was closed because my account equity hit the 17,000 lower limit I had set for that signal.
21,560.18 - 17,000 = 4,560.18 which is at least a relative DD by equity of 4,560.18 / 21,560.18 = 21.15%
The graph shows a value of 6.36% for the higher of the 2 lines on the right.
There are different types of drawdown so I make a summary post to understand those types (because many users are asking about): post #806
Example:
Thanks, Sergey, but I had done my homework before posting.
You didn't answer any of my questions:
- Does a higher leverage on the account than on the signal affect the relative DD by equity?
- If so, is it linear? 1:500 vs. 1:300 means a 5/3 higher DD?
Even if that is the case it doesn't explain the difference between 6.36% on the signal and 21.15% on my account.
The symbol is XAUUSD, so nothing exotic.
I've attached screenshots of my trade and the signal's trade as well as the relative DD by equity graph. The signal only had this one open trade at that time. My balance was at 21,560.18, the trade was closed because my account equity hit the 17,000 lower limit I had set for that signal.
21,560.18 - 17,000 = 4,560.18 which is at least a relative DD by equity of 4,560.18 / 21,560.18 = 21.15%
The graph shows a value of 6.36% for the higher of the 2 lines on the right.
The reason is simple, the contract specifications in your broker are different than the signal's broker for XAUUSD, so instead of having around $2000 drawdown with your 2.20 XAUUSD trade, you had $4447.
What I mean is that 1 lot XAUUSD in your broker doesn't have the same USD exposure as 1 lot in signal provider's broker.
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I'm copying a signal using 95% of my deposit and don't copy any other signals on that account. The signal's leverage is 1:300, mine is 1:500. I read the explanation for the calculation of relative lot sizes:
https://www.mql5.com/en/forum/215636
Based on that explanation I would expect that the risk on the signal's account and mine should be approximately the same (100% on signal's account, 95% on mine). By risk I mean that if the signal's account goes down by 1%, I should also lose about 1%. I understand that differences in fees and slippage can have an impact, but let's ignore these for the sake of simplicity. Is my assumption correct or does the difference in leverage mean I have a higher risk?
The reason I ask is the following: I observed yesterday that the signal's relative DD by equity was at most 6.36%, maybe even lower. (It's hard to tell, because there are 2 lines very close to each other on the diagram). However, I stopped copying the signal, because on my account the relative DD by equity was more than 20%. How is that possible?
P.S.: the diagram is up-to-date, because the stats for maximal DD by balance show the trade that caused my account to crash. The slippage on that trade was 2 pips, so it doesn't explain the relative DD that is more than 3 times higher.