Maximum Balance Drawdown Calculation

Created at 18 Sep 2023, 18:02


Joined 14.09.2023

Maximum Balance Drawdown Calculation
18 Sep 2023, 18:02

The method Ctrader uses to calculate maximum balance drawdown is absolutely ludacris. If you guys base the maximum drawdown balance  solely on the the initial starting balance of the account, then, when new deposits are made into the account and losses are incurred, the drawdown balance will be inflated. The mathematical calculation is simple, however, let me provide a simple example:

A trader opens his Ctrader account with $1000. Overtime he realises he is profitable and decides to make a deposit into his Ctrader account making his new total account balance $5000. If he risks 1% and loses, that would be a loss of $50 on his $5000 account. But if Ctrader is using the initial starting balance of $1000 as the basis for MAXIMUM balance drawdown, then that 1% loss of $50 would show up as a 5% loss. Do you guys see how this isn't an accurate reflection of the real drawdown being incurred by the trader? This method of calculating max balance drawdown is flawed and is prohibiting various traders from securing private funds using their Ctrader stats. 

It would benefit the Ctrader community and the wider investment community greatly if you guys look into this problem and use a formula which makes provisions for additional deposits made by the trader when calculating maximum balance drawdown. 

Praying you guys will look into this. Thank you.