Mathematics on : calculating the real drawdown

Previous publications were only a preamble before the market actions themselves. It is time to briefly describe trading strategy. This description cannot be complete, because there are more than enough "little tricks" in it. I will of course try to describe each tactical technique, but since we are dealing with a chaotically changing process, in some cases we have to reinvent our actions, starting from the key description of a similar (not identical) market situation.

Mathematics on

 

The minus that outweighs the pluses

Nowadays, a gigantic number of publications have appeared on the Internet devoted to the so-called "grid strategy". It is discussed at forums, is described in articles, and, as a consequence, advisors are offered, both for free use, and at a reasonable price. Each description and each advisor is "exclusive" and "unique". Others simply are not there. I want to tell you right away to warn gullible users. All descriptions of "win-win trading systems" have an extremely low information load, on the basis of which it is almost impossible to choose the right current action, not to mention their sequence and order. The only advantage of these systems is that they can be understood by almost anyone who is able to put their signature on a document instead of a cross or a thumbprint. The minus, however, is worth all the pluses.is a guaranteed loss of the deposit. This statement primarily applies to "robots".

Indeed, in order for the program to work, it must rely on some constants in it, but they will be constants only for a while. And they will be profitable for a while. However, this will not always be the case. The fact is that these constant values in the course of the game change, acquiring functional dependenciesThe MTS presented here changes the constants automatically and the constants are not reflected in the original program. In the presented MTS the change of constants is automatic.

Calculate the real drawdown

In order to control the game as much as possible, it is necessary to create a number of other tables. To begin with let's try to calculate the real drawdown. Since we will play both ways, closing partially both up and down, our balance will grow, but the "total" drawdown will grow as well, so the "real" drawdown will naturally be quite different from what MT-4 will show us. Let's denote the initial deposit B1but the balance that the platform will show us. B, then the difference between them will show balance change, but not the real drawdown. It is necessary to consider also the total drawdown in the column "profit" of the MT4 terminal. Usually the drawdown is denoted by the big Latin letter Dbut we have already used it in previous tables. To avoid confusion, we denote it by dd, and the real drawdown as ∆.

Fig. 1. Formula for calculating the real drawdown.
Fig. 1. Formula for calculating the real drawdown.

Of course, the drawdown is negative, but it is not necessary to take the module of this value. It is enough to add a negative value. It makes sense to add another value, which returns a percentage of the drawdown from the initial amount Deposits.

Fig. 2. The formula for calculating the percentage of drawdown from the initial deposit amount.
Fig. 2. The formula for calculating the percentage of drawdown from the initial deposit amount.

It is quite natural to ask, why do we need it? After all, in the platform the value of the total amount of remaining free money is reflected. Undoubtedly, this is true, but these calculations are necessary, because in the next publication I will tell you how both the working volume and the current price are connected with the level of our entry.

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