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The following was posted to the Omega List only 2 days ago by Bill Brower.
Seems it would answer your question:
There are three computations for drawdown. The Max TradeStation DD, The
Max Mark-to-Market DD, and the Max Closed Trade DD. You should know how
TradeStation computes DD. If you have a trade that goes long, is $5000 in
the hole 3 days later, is up $20000 10 days later and closes out with a
$10000 profit, TS would report a $5000 DD. The Mark-to-Market DD would be
$10000. The Closed Trade DD would be $0.
----- Original Message -----
From: "Anthony" <Anthony3@xxxxxxxxxxxx>
To: <omega-list@xxxxxxxxxx>
Sent: Wednesday, July 19, 2000 01:12
Subject: Drawdown defined
> Hi,
>
> Can someone please tell me what the exact definition of drawdown is?
> I've heard several different definitions of it.
>
> Is it....
>
> 1) The maximum amount your account dips before you make a new equity
> high?
>
> 2) The most you lose in any given number of consecutive losing trades?
>
> 3) Or is it something else?
>
> Thanks all.
>
> --
> Anthony
>
>
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