Maximum Drawdown Calculation

[cb4gusto22]

Hello,

How exactly is Max. Drawdown calculated in the strategy analyzer? I understand that "The maximum drawdown statistic provides you with information regarding the biggest decrease (drawdown) in account size experienced by your strategy. Drawdown is often used as an indicator of risk."

My question is how does NT actually calculate this considering I have not chosen an account size and when I track it with my own variables I get a different result (which is obvious since my own variables take into account a starting balance)? Does NT calculate Max DD using a default starting account size or does it normalize it in some way? Thanks for the help!

[NinjaTrader_Brandon]

Hello,

Thanks for writing in.

Backtesting will use the Backtest account set up under Tools> Options> Simulator
You can adjust these values, select Reset, and select the Backtest account to adjust this.

Below I have provided a link to the Understanding Max. Drawdown section of the help guide.

http://ninjatrader.com/support/helpGuides/nt7/?statistics_definitions.htm

[Kevin Kim]

Maximum drawdown is cacluated as (maximum cumulative profit - minimum cumulative profit) inside trading period. Correct me if I'm wrong.

[NinjaTrader_Brandon]

Hello Kevin,
Thanks for your reply.
Here is the example from the Help Guide.
"Max Drawdown = single largest Drawdown

As an example, your account rises from $25,000 to $50,000. It then subsequently drops to $40,000 but rises again to $60,000. The drawdown in this case would be $10,000 or -20%. Take note that drawdown does not necessarily have to correspond with a loss in your original account principal."