What is Drawdown?
Drawdown is your personal trading historian, tracking the lowest points your account reaches overtime before it bounces back. Imagine it as the friend who keeps an eye on your account’s dips so you can better manage your trading journey.
Drawdown Widgets
The Cumulative Drawdown Widget (Bottom Section)
The Drawdown Widget helps you visualize the lows of your account over time. It’s like a scoreboard that tracks how much your account has dipped before you started recovering.
Let’s look at a simple scenario:
Day 1: You start the month strong, up +$1,600. What is your drawdown at? Zero, because you’re green!
Day 2: You face a tough market and lose -$1,500. This becomes your drawdown peak – the highest loss you’ve encountered this month.
Day 3: Another challenging day, losing -$900. Your drawdown is now $2,400 ($1,500 + $900).
Day 4: A great recovery day, up +$2,100. Your drawdown is reduced to -$300.
Day 5: You finish the week strong, up +$1,500. Your drawdown is now back to $0, as you’ve covered the losses from the previous days.
So there you have it, your drawdown widget doing its thing – keeping track of your trading lows in a simple & automated manner!
The Max Drawdown Widget (Top Section)
The Max Drawdown Widget takes things a step further by tracking the maximum decline your account experiences during a specific period. It shows:
Max Drawdown: $ Value – The largest dollar amount your account dropped during a specific period.
Max Drawdown: % Value – The biggest percentage decline in your account value.
Date of Max Drawdown – The exact date when this drop occurred.
For example, if your account took a nosedive and hit a max drawdown of $18,107.33 on September 27, 2023, the Max Drawdown Widget will display this figure in a clear written value form.
💡 Pro Tip: The Max Drawdown and Drawdown Widgets are different, with the Max Drawdown Widget focusing on the deepest single point decline, while the Drawdown Widget tracks cumulative declines over time.
Adding Widgets to Your Dashboard
Max Drawdown Widget (Top Section)
Go to your TradeZella dashboard.
Click on the “Template” button at the top right corner of the screen.
Click on the “Edit” (Pencil Icon) button or select “Create New Template.”
In the top section, add the Max Drawdown Widget.
Save your changes by clicking on the “Done” button.
Drawdown Widget (Bottom Section)
Follow the same steps as above but scroll down to the bottom section to add the Drawdown Widget.
Save your changes.
Why Drawdown Matters
Understanding your drawdown can provide valuable insights into your strategy:
Risk Management Comfortness: Knowing your drawdown helps you assess the level of risk you’re comfortable with. It’s like a safety net, reminding you not to go far beyond your average drawdown.
Evaluate Your Performance: Is your strategy working? Is it time to adjust your approach? Your drawdown has the answers.
That’s a wrap! Remember, trading is a thrilling adventure and drawdown is part of the game! Just focus on staying within your average drawdown instead of creating new ones.
Need further support? Contact our support team at support@tradezella.com.