What is the quity drawdown?
The equity drawdown refers to a drop in equity in a trader's account. A drawdown is commonly defined as the decline from a high peak to a pullback low of the equity in a trader's account.
How to calculate the drawdown at every equity's trough:
In which:
- EDD: The equity drawdown (%)
- Max E: The maximum amount of the equity ($)
- Eo: The amount of the equity at a trough low