Hello,
I'm overlooking part of my calculation and I can't seem to figure out what I'm missing
My goal is to calculate the total amount of equity needed to trade through a period of max. draw down. I have examples below. The first picture shows my settings for the EUR/USD and the max draw down period for that statement.
How much capital has to be deposited within the account so that I can trade through this period and not blow out the account? This second picture is of an account statement when the max. draw down occurred.
If anyone is interested, I can send you the actual spreadsheet. Right now, it takes approximately $15,000 to withstand this period of draw down. I'm hoping to get more accurate. I'm trying to create or find a formula that will tell me an exact amount.
Any help would be greatly appreciated!
Thank you.
Help calculating max equity needed
Help calculating max equity needed
 Attachments

 spreadsheet.jpg (553.79 KiB) Viewed 900 times
Re: Help calculating max equity needed
Hello,
According to my info, the total loss of these orders can be 10207.08 (if all these 15 orders are losing).
Please note that you can also find the "Max drawdown" option in the "Statisctics" window and check its value, maybe it will help you.
According to my info, the total loss of these orders can be 10207.08 (if all these 15 orders are losing).
Please note that you can also find the "Max drawdown" option in the "Statisctics" window and check its value, maybe it will help you.
Re: Help calculating max equity needed
Thank you for your reply.
You wrote, "According to my info, the total loss of these orders can be 10207.08 (if all these 15 orders are losing)."
You may want to double check the numbers. The 15th trade made a profit. If you add up the first 14 trades (all loosing) you will have a loss of 5074.68
According to the exported spreadsheet from the account history, the max draw down was 6622.22
Here's actually why I'm posting. Below is a screen shot of the same trading period. The max draw down in the statistics window shows an amount of 6607.82
So which is correct? The amount in the statistics window or the amount in the Min Equity column on the exported account history?
Can you please tell me the exact calculation that FT3 uses to calculate Max Draw Down?
Thank You.
You wrote, "According to my info, the total loss of these orders can be 10207.08 (if all these 15 orders are losing)."
You may want to double check the numbers. The 15th trade made a profit. If you add up the first 14 trades (all loosing) you will have a loss of 5074.68
According to the exported spreadsheet from the account history, the max draw down was 6622.22
Here's actually why I'm posting. Below is a screen shot of the same trading period. The max draw down in the statistics window shows an amount of 6607.82
So which is correct? The amount in the statistics window or the amount in the Min Equity column on the exported account history?
Can you please tell me the exact calculation that FT3 uses to calculate Max Draw Down?
Thank You.
 Attachments

 statistics.jpg (380.35 KiB) Viewed 804 times
Re: Help calculating max equity needed
Hello,
I received 10207.08 by summing all 15 orders with loss. So I received 6622.22 for your 14 orders and then added 5132.40.
I thought that you need to know how much equity do you need to have if all these orders are losing orders.
The "Max drawdown" value in the "Statistics" tab is completely correct.
A drawdown is the reduction of one’s capital after a series of losing trades. This is normally calculated by getting the difference between a relative peak in capital minus a relative trough.
"Max drawdown" shows the biggest of these values.
I received 10207.08 by summing all 15 orders with loss. So I received 6622.22 for your 14 orders and then added 5132.40.
I thought that you need to know how much equity do you need to have if all these orders are losing orders.
The "Max drawdown" value in the "Statistics" tab is completely correct.
A drawdown is the reduction of one’s capital after a series of losing trades. This is normally calculated by getting the difference between a relative peak in capital minus a relative trough.
"Max drawdown" shows the biggest of these values.
Re: Help calculating max equity needed
Hello,
Yes, you are almost correct. You wrote, "I thought that you need to know how much equity do you need to have if all these orders are losing orders." I'm trying to calculate the amount of capital/equity needed in order to withstand or successfully trade through this period of maximum drawdown.
You wrote, "This is normally calculated by getting the difference between a relative peak in capital minus a relative trough.
"Max drawdown" shows the biggest of these values."
I agree. So is it safe to say that if I add all of the negative amounts in the Min. Equity column that will tell me how much negative equity the account experienced? In this example, the Min Equity is:
3.90
3.90
7.80
15.60
31.20
58.08
109.20
218.40
222.30
331.50
499.20
752.70
1131.00
1704.30
1533.14
Total  6622.22 (keep this number in mind for what's shown below)
In FT3 under Symbol Properties, I check off the box entitled, "use leverage info to calculate" which is 100:1 and my lot size is 100,000
I've attached two links below. The first is a video showing your total loss amount of 10,207.08 (this amount is already 54.13% over the total amount of Min. Equity, 6622.22)
You can see in the account history that the initial deposit is 10,207.08
Now remember, you calculated the total amount of loss for ALL 15 trades, when really there are only 14 loosing trades. But for the sake of example, I added the theoretically loss.
In the video, you will see that I can not get past a trade with a lot size of 4.37.
http://4seasonsonline.com/FX/10207.mp4
The second video shows how I am able to trade through the period of max draw down with a deposit of 14,000. This amount of 14,000 is 111.40% greater than total amount of Min. Equity, 6622.22
I've tried using the amount of 13,750 and lesser amounts as a deposit but was still unable to trade past the lot size of 4.37
With the strength of FT3, I should be about to find/calculate and exact amount. For example, maybe I need 13,985 instead of 14,000. If you're wondering how I found the amount of 14,000... I did a number of back test in which I simply guessed the deposit amount.
http://4seasonsonline.com/FX/14000.mp4
As you can imagine, I don't like to spend time guessing
I appreciate your help and if anyone has any ideas or better yet, an explanation or formula to calculate MDD in FT3, I'd be very thankful.
Yes, you are almost correct. You wrote, "I thought that you need to know how much equity do you need to have if all these orders are losing orders." I'm trying to calculate the amount of capital/equity needed in order to withstand or successfully trade through this period of maximum drawdown.
You wrote, "This is normally calculated by getting the difference between a relative peak in capital minus a relative trough.
"Max drawdown" shows the biggest of these values."
I agree. So is it safe to say that if I add all of the negative amounts in the Min. Equity column that will tell me how much negative equity the account experienced? In this example, the Min Equity is:
3.90
3.90
7.80
15.60
31.20
58.08
109.20
218.40
222.30
331.50
499.20
752.70
1131.00
1704.30
1533.14
Total  6622.22 (keep this number in mind for what's shown below)
In FT3 under Symbol Properties, I check off the box entitled, "use leverage info to calculate" which is 100:1 and my lot size is 100,000
I've attached two links below. The first is a video showing your total loss amount of 10,207.08 (this amount is already 54.13% over the total amount of Min. Equity, 6622.22)
You can see in the account history that the initial deposit is 10,207.08
Now remember, you calculated the total amount of loss for ALL 15 trades, when really there are only 14 loosing trades. But for the sake of example, I added the theoretically loss.
In the video, you will see that I can not get past a trade with a lot size of 4.37.
http://4seasonsonline.com/FX/10207.mp4
The second video shows how I am able to trade through the period of max draw down with a deposit of 14,000. This amount of 14,000 is 111.40% greater than total amount of Min. Equity, 6622.22
I've tried using the amount of 13,750 and lesser amounts as a deposit but was still unable to trade past the lot size of 4.37
With the strength of FT3, I should be about to find/calculate and exact amount. For example, maybe I need 13,985 instead of 14,000. If you're wondering how I found the amount of 14,000... I did a number of back test in which I simply guessed the deposit amount.
http://4seasonsonline.com/FX/14000.mp4
As you can imagine, I don't like to spend time guessing
I appreciate your help and if anyone has any ideas or better yet, an explanation or formula to calculate MDD in FT3, I'd be very thankful.
Re: Help calculating max equity needed
Hello,
Yes, correct, if you sum all values in the "Min Equity" field, you will receive the maximum possible drawdown during trading.
As for the video:
As I can see, the last opened order had 4.37 lot.
What lot should the next order have?
As I can see, you have only 5140.2 USD left so if the next order has lot size bigger than 5.14, our software can't open it because of insufficient margin.
If you want to place bigger orders, you will need to deposit more money to your account, or increase the leverage.
Yes, correct, if you sum all values in the "Min Equity" field, you will receive the maximum possible drawdown during trading.
As for the video:
As I can see, the last opened order had 4.37 lot.
What lot should the next order have?
As I can see, you have only 5140.2 USD left so if the next order has lot size bigger than 5.14, our software can't open it because of insufficient margin.
If you want to place bigger orders, you will need to deposit more money to your account, or increase the leverage.
Re: Help calculating max equity needed
Hello,
You wrote, "Yes, correct, if you sum all values in the "Min Equity" field, you will receive the maximum possible drawdown during trading."
Thank you for verifying. So in the example shown above, and I will repost, the amounts shown in the "Min Equity" field are:
Lot Size  Min Equity
0.01 3.90
0.01 3.90
0.02 7.80
0.04 15.60
0.08 31.20
0.16 58.08
0.28 109.20
0.56 218.40
0.57 222.30
0.85 331.50
1.28 499.20
1.93 752.70
2.90 1131.00
4.37 1704.30
6.58 1533.14
You wrote, “As I can see, the last opened order had 4.37 lot. What lot should the next order have?"
The next lot size after 4.37 should have been 6.58.
What you wrote next I believe will greatly help. You wrote, "As I can see, you have only 5140.2 USD left so if the next order has lot size bigger than 5.14, our software can't open it because of insufficient margin."
That last sentence is important. How did you calculate that a lot size, no larger than 5.14 would be possible?
You say, "As I can see, you have only 5140.2 USD left so.." Where in my posts or videos do you see the amount or calculate the amount of 5140.20? Because in theory, and this is where I'm having issues. I should be able to calculate all of the Min Equity, which is:
3.90
3.90
7.80
15.60
31.20
58.08
109.20
218.40
222.30
331.50
499.20
752.70
1131.00
1704.30
1533.14
Total Min Equity = $6622.22 USD
Am I wrong to think that I will need more than 6622.22 USD? As I've mentioned, I cannot trade through this period of drawdown unless the account has roughly $14,000 USD. This is shown in the above video http://4seasonsonline.com/FX/14000.mp4
You wrote the following:
"Postby FX Helper » Thu Mar 02, 2017 1:22 pm
Hello,
According to my info, the total loss of these orders can be 10207.08 (if all these 15 orders are losing)."
The video above, this one  http://4seasonsonline.com/FX/10207.mp4 is a video which shows the account with a deposit of 10,207 USD. I excluded the .08 because the first trade in the video has a 7.80 gain. Sadly, even with a deposit of 10,207 USD trading through this period in not successful.
The amount of 14,000 USD is more than double the Min Equity. The leverage used in this example is 100:1
I am thankful for your replies and I am looking forward to hearing how you calculated the lot size of 5.14
Regards.
You wrote, "Yes, correct, if you sum all values in the "Min Equity" field, you will receive the maximum possible drawdown during trading."
Thank you for verifying. So in the example shown above, and I will repost, the amounts shown in the "Min Equity" field are:
Lot Size  Min Equity
0.01 3.90
0.01 3.90
0.02 7.80
0.04 15.60
0.08 31.20
0.16 58.08
0.28 109.20
0.56 218.40
0.57 222.30
0.85 331.50
1.28 499.20
1.93 752.70
2.90 1131.00
4.37 1704.30
6.58 1533.14
You wrote, “As I can see, the last opened order had 4.37 lot. What lot should the next order have?"
The next lot size after 4.37 should have been 6.58.
What you wrote next I believe will greatly help. You wrote, "As I can see, you have only 5140.2 USD left so if the next order has lot size bigger than 5.14, our software can't open it because of insufficient margin."
That last sentence is important. How did you calculate that a lot size, no larger than 5.14 would be possible?
You say, "As I can see, you have only 5140.2 USD left so.." Where in my posts or videos do you see the amount or calculate the amount of 5140.20? Because in theory, and this is where I'm having issues. I should be able to calculate all of the Min Equity, which is:
3.90
3.90
7.80
15.60
31.20
58.08
109.20
218.40
222.30
331.50
499.20
752.70
1131.00
1704.30
1533.14
Total Min Equity = $6622.22 USD
Am I wrong to think that I will need more than 6622.22 USD? As I've mentioned, I cannot trade through this period of drawdown unless the account has roughly $14,000 USD. This is shown in the above video http://4seasonsonline.com/FX/14000.mp4
You wrote the following:
"Postby FX Helper » Thu Mar 02, 2017 1:22 pm
Hello,
According to my info, the total loss of these orders can be 10207.08 (if all these 15 orders are losing)."
The video above, this one  http://4seasonsonline.com/FX/10207.mp4 is a video which shows the account with a deposit of 10,207 USD. I excluded the .08 because the first trade in the video has a 7.80 gain. Sadly, even with a deposit of 10,207 USD trading through this period in not successful.
The amount of 14,000 USD is more than double the Min Equity. The leverage used in this example is 100:1
I am thankful for your replies and I am looking forward to hearing how you calculated the lot size of 5.14
Regards.
Re: Help calculating max equity needed
Hello,
I've received 5140.2 USD via this video:
http://4seasonsonline.com/FX/10207.mp4
I see that you had 10207.08 deposit and current profit is 5066.88
So 10207.08  5066.88 = 5140.2  this is your current balance
So with leverage 100:1 and lot size 100,000 you can open the order with maximum 5.14 lot.
To open the order with 6.58 lot you need to have at least 6580 USD of balance.
Or you can increase leverage, in this case you can open orders with bigger lot sizes.
I've received 5140.2 USD via this video:
http://4seasonsonline.com/FX/10207.mp4
I see that you had 10207.08 deposit and current profit is 5066.88
So 10207.08  5066.88 = 5140.2  this is your current balance
So with leverage 100:1 and lot size 100,000 you can open the order with maximum 5.14 lot.
To open the order with 6.58 lot you need to have at least 6580 USD of balance.
Or you can increase leverage, in this case you can open orders with bigger lot sizes.
Re: Help calculating max equity needed
Hello,
Thank you again for your reply.
You wrote, "I see that you had 10207.08 deposit and current profit is 5066.88
So 10207.08  5066.88 = 5140.2  this is your current balance"
Yes, I understand and agree. The balance of 5140.20 is the amount in the account after the trade with a lot size of 4.37 is complete.
You wrote, "So with leverage 100:1 and lot size 100,000 you can open the order with maximum 5.14 lot."
Thank you, the last lot size entered into was 4.37 and the next trade which must be executed needs a lot of 6.58
Due to the remaining balance, or lack thereof, a lot size of 6.58 is not possible. I understand.
You wrote, "To open the order with 6.58 lot you need to have at least 6580 USD of balance."
I agree and understand. So to simply enter into the trade, the account will need a balance of 6580. It only has 5140.20
So when I change the deposit amount to reflect the additional capital needed, my calculation looks like this:
6580  5140.20 = 1,439.80 This is the amount which needs to be added the original deposit of 10207.08
10207.08 + 1439.80 = 11,646.88
Lastly, since there was equity lost during the trade with the 6.58 lot size . That amount of loss also needs to be calculated, so that the trade can successfully exit the position.
According to previous results from the exported account history shown above. During the trade that has a lot size of 6.58 (shown above) there was a period when 1533.14 of equity was lost.
I add 1533.14 to 11,646.88 which equals 13,180.02
Unless I am incorrect, I will need 13,180.02 to trade through this period of draw down. I'll round up and say 13,181.
Look here to see what happens  http://4seasonsonline.com/FX/13181.mp4
The strange thing is, when I use the amount of 13,181, trades are actually skipped. For some reason they are ignored? With an initial deposit of 13,181, I can enter into a trade which has a lot size of 6.58, but it takes place 3 months later than it should on 2012.07.13. This is incorrect. The trade should have been entered into on 2012.04.03. This date is shown above in my previous post and in the newer video below.
Also, as seen in the Journal, there are insufficient funds. So a lot size of 6.58 should never be possible. But somehow it happens?
Not good.
If I simply guess at how much of a deposit is needed, let’s say instead of 13,181, I place a deposit of 14,000
This amount works fine, but still, I'm simply guessing at the deposit amount. On the positive side, no trades are ignored.
This can be seen here  http://4seasonsonline.com/FX/14000a.mp4
Again, if I do a guess and bump the deposit amount up to 14,000 no trades are skipped or ignored and the outcome is perfect.
The problem I'm having is that I don't want to, nor should I have to guess at how much capital must be deposited into an account in order to withstand max draw down.
To simply increase leverage is not an option. Realistically, a broker can deny your request for an increase in leverage.
Trades being skipped or ignored based off of an accounts deposited amount also shows a great deal of inaccuracy with the software.
From the time and date shown in the videos, I'm literally performing test minutes apart and yet trades are being ignored based off of deposit amounts. Not good.
In FT 2.9 these events never occurred.
The amounts shown may seem miniscule or arbitrary, but in reality. The amounts traded live are much larger. Hence the reason why precision is needed.
I'd love to work on solving this issue. Any information you need from me, please ask. But not having the ability to calculate correct draw down, as well as having trades ignored for some reason. Not good at all.
Again, if there is anything I can do to help, please ask.
Thank you again for your reply.
You wrote, "I see that you had 10207.08 deposit and current profit is 5066.88
So 10207.08  5066.88 = 5140.2  this is your current balance"
Yes, I understand and agree. The balance of 5140.20 is the amount in the account after the trade with a lot size of 4.37 is complete.
You wrote, "So with leverage 100:1 and lot size 100,000 you can open the order with maximum 5.14 lot."
Thank you, the last lot size entered into was 4.37 and the next trade which must be executed needs a lot of 6.58
Due to the remaining balance, or lack thereof, a lot size of 6.58 is not possible. I understand.
You wrote, "To open the order with 6.58 lot you need to have at least 6580 USD of balance."
I agree and understand. So to simply enter into the trade, the account will need a balance of 6580. It only has 5140.20
So when I change the deposit amount to reflect the additional capital needed, my calculation looks like this:
6580  5140.20 = 1,439.80 This is the amount which needs to be added the original deposit of 10207.08
10207.08 + 1439.80 = 11,646.88
Lastly, since there was equity lost during the trade with the 6.58 lot size . That amount of loss also needs to be calculated, so that the trade can successfully exit the position.
According to previous results from the exported account history shown above. During the trade that has a lot size of 6.58 (shown above) there was a period when 1533.14 of equity was lost.
I add 1533.14 to 11,646.88 which equals 13,180.02
Unless I am incorrect, I will need 13,180.02 to trade through this period of draw down. I'll round up and say 13,181.
Look here to see what happens  http://4seasonsonline.com/FX/13181.mp4
The strange thing is, when I use the amount of 13,181, trades are actually skipped. For some reason they are ignored? With an initial deposit of 13,181, I can enter into a trade which has a lot size of 6.58, but it takes place 3 months later than it should on 2012.07.13. This is incorrect. The trade should have been entered into on 2012.04.03. This date is shown above in my previous post and in the newer video below.
Also, as seen in the Journal, there are insufficient funds. So a lot size of 6.58 should never be possible. But somehow it happens?
Not good.
If I simply guess at how much of a deposit is needed, let’s say instead of 13,181, I place a deposit of 14,000
This amount works fine, but still, I'm simply guessing at the deposit amount. On the positive side, no trades are ignored.
This can be seen here  http://4seasonsonline.com/FX/14000a.mp4
Again, if I do a guess and bump the deposit amount up to 14,000 no trades are skipped or ignored and the outcome is perfect.
The problem I'm having is that I don't want to, nor should I have to guess at how much capital must be deposited into an account in order to withstand max draw down.
To simply increase leverage is not an option. Realistically, a broker can deny your request for an increase in leverage.
Trades being skipped or ignored based off of an accounts deposited amount also shows a great deal of inaccuracy with the software.
From the time and date shown in the videos, I'm literally performing test minutes apart and yet trades are being ignored based off of deposit amounts. Not good.
In FT 2.9 these events never occurred.
The amounts shown may seem miniscule or arbitrary, but in reality. The amounts traded live are much larger. Hence the reason why precision is needed.
I'd love to work on solving this issue. Any information you need from me, please ask. But not having the ability to calculate correct draw down, as well as having trades ignored for some reason. Not good at all.
Again, if there is anything I can do to help, please ask.
Re: Help calculating max equity needed
Hello,
Thank you for the update.
I found an error in my calculations, I didn't count the current EURUSD price, it was equal to 1 in my previous calculations.
Now I'm talking about not opening the order with 6.58 lot size.
The profit of all previous orders (before the order with 6.58 lot size) was 5066.88
The next order with 6.58 lot size should be opened at 1.32140 price.
So we multiply 6580 units by 1.32140 and receive 8694,812  the amount of margin you need to have to open the order with 6.58 lot size.
So the total balance you need to have is 8694.812 + 5066.88 = 13761.692 ~= 13761.7
That's why the 6.58 order hasn't been opened when you has 13181 balance but everything worked when you had 14000.
You can use this calculator to calculate required margin:
http://www.fxpro.co.uk/trading/calculators/margin
Thank you for the update.
I found an error in my calculations, I didn't count the current EURUSD price, it was equal to 1 in my previous calculations.
Now I'm talking about not opening the order with 6.58 lot size.
The profit of all previous orders (before the order with 6.58 lot size) was 5066.88
The next order with 6.58 lot size should be opened at 1.32140 price.
So we multiply 6580 units by 1.32140 and receive 8694,812  the amount of margin you need to have to open the order with 6.58 lot size.
So the total balance you need to have is 8694.812 + 5066.88 = 13761.692 ~= 13761.7
That's why the 6.58 order hasn't been opened when you has 13181 balance but everything worked when you had 14000.
You can use this calculator to calculate required margin:
http://www.fxpro.co.uk/trading/calculators/margin
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