Maximal relative drawdown shows a percentage of losses in an account.

It’s calculated using the formula :

Max ((MaximalPeak – NextMinimalPeak) / (MaximalPeak + 100) * 100) (%)

where:

• Max — the highest relative drawdown value;
• MaximalPeak — the upper extremum value corresponding to Max in the profitability chart;
• NextMinimalPeak — the lower extremum value following MaximalPeak in the profitability chart.

Example of relative drawdown calculation for the chart above:

Let’s estimate the extremums of the profitability chart (“H” for the highest and “L” for the lowest)

• H1 = 80%, L1= 50%;
• H2 = 90%, L2 = 35%;
• H3 = 135%, L3 = 40%;
• H4= 195%, L4 = 65%.

Relative drawdown values are calculated as follows:

• PercentDrawDown1 = (H1 – L1) / (H1 + 100) * 100 = (80 – 50) / (80 + 100) х 100 = 16,67%
• PercentDrawDown2 = (H2 – L2) / (H2 + 100) * 100 = (90 – 35) / (90 + 100) х 100 = 28,95%
• PercentDrawDown3 = (H3 – L3) / (H3 + 100) * 100 = (135 – 40) / (135 + 100) х 100 = 40,43%
• PercentDrawDown4 = (H4 – L4) / (H4 + 100) * 100 = (195 – 65) / (195 + 100) х 100 = 44,07%

MaxRelativeDrawdown = 44,07%

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