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lamode · 25-10-2006, 14:27

Hi guys, I was reading the book, the new market wizards, I believe many of you has heard of. One thing that I don't quite understand is what is mean by average annual drawdown and how to calculate that? Do i add all the years that has negetive P/L and divide by the number of years?

Also what excatly does it means by drawdown? Say if I made a 10k account to 12k and then it drop back to 9k, that is 3k drop from the top of my equity, does it means 30% drawdown or I only use the 10k in my calculation, so that would be 10% drawdown?

Thanks in advanced.

25-10-2006, 14:27	#1
lamode level 3 Join Date: Nov 2005 Posts: 296 Downloads: 0 Uploads: 1 Rep Power: 3	Definition for annual drawdown? Hi guys, I was reading the book, the new market wizards, I believe many of you has heard of. One thing that I don't quite understand is what is mean by average annual drawdown and how to calculate that? Do i add all the years that has negetive P/L and divide by the number of years? Also what excatly does it means by drawdown? Say if I made a 10k account to 12k and then it drop back to 9k, that is 3k drop from the top of my equity, does it means 30% drawdown or I only use the 10k in my calculation, so that would be 10% drawdown? Thanks in advanced.