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Now I think I know what an equity curve is, which shows the low point
(or drawdown) over time.
But what is average drawdown?
Good question. The number of drawdowns in the average is usually stated (as
in "the average of the ten largest drawdowns".) As you are aware, you are
either making a new equity peak or you are in a drawdown - so the total
number of drawdowns that can be measured can be substantial. I usually see
the ten largest drawdowns as the number commonly used to create an average
drawdown calculation.
Chuck LeBeau
www.traderclub.com
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